MGT 372

INTERNATIONAL BUSINESS
GRAMEEN PHONE- MANAGEMENT STYLE AND PRACTICES
PRESENTED TO MR. MUHAMMAD ARIFUL GHANI PRESENTED BY
SALMAN DAUD SUFIAN AHMED ROKTIM NAFEES IMTIAZ IFTEKHER RAJIB RUPAI AHMED AMAN YOUSOOF 101 0600 030 102 0344 030 102 0009 030 101 0994 030 093 0274 030

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TABLE OF CONTENTS

Topic EXECUTIVE SUMMARY INTRODUCTION COMPANY OVERVIEW CORE PRODUCTS AND SERVICES MANAGEMENT STRUCTURE HUMAN RESOURCE MANAGEMENT FINANCIAL INFORMATION MARKETING EFFECTS OF GLOBALIZATION THE ROLE OF TECHNOLOGY FOREIGN DIRECT INVESTMENT SWOT ANALYSIS CHALLENGES FACED RECOMMENDATIONS CONCLUSION REFERENCE

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EXECUTIVE SUMMARY

This report mainly focused on theoretical & conceptual analysis about the relevant International Business concepts of a firm in the telecom industry of Bangladesh, namely Grameen Phone. Our report heavily focused on the managerial styles and practices of Grameen Phone Ltd. The whole report is divided into several segmented topic headings & when required we use appropriate talking headings. By browsing through the comprehensive index & the table of contents one can get the clear idea about the research project.

The major highlights of this report include an introduction of GP, followed by a brief company overview and an outline of its core products and services. The main body of the report had its pivotal focus on the management styles and practices, and includes the HRM, Marketing and Finance departments work description. The report also related the management practices with the International Business concepts, with analysis on Effects of Globalization, the Role of Technology, benefits and cost of FDI. A summarized SWOT analysis should help the reader to understand the SWOT at a glance. Moreover, we identified the challenges that Grameen Phone faces in its operation in this country from an IB perspective, which include Tax evasion problems and Downsizing, and suggested our recommendations.

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INTRODUCTION Grameen Phone Ltd. (GP) is the market leader in the mobile telecommunication industry of Bangladesh. GP is a joint venture between Bangladesh and Norway. Grameen Phone Ltd is operating as a multinational company in Bangladesh. With the slogan Stay Close, stated goal of
Grameenphone is to provide affordable telephony to the entire population of Bangladesh

In 2008 it went public. Presently the shareholder status of the company is Telenor (61.2%), Grameen Telecom (28.8%), Institute (5%), and Public (5%). Telenor is the state owned telecommunication company of Norway. It has operations in different countries of the world. On the other hand, Grameen Telecom is the sister concern of Grameen Bank, one of the biggest Non Government Organizations (NGO) of Bangladesh.
PUBLIC 5% INSTITUTE 5%

Ownership

GRAMEEN TELECOM 29%

TELENOR 61%

Principally GP was established in 1995. But due to government policy, GP did not permission to start their operation. The license agreement was signed on October 31, 1996. The company started the hard work of the developing the infrastructure facilities in the country. GP did not take much time to start its operations. The commercial launch was on March 26, 1997.

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COMPANY OVERVIEW Name : Grameen Phone Ltd Tagline: Stay Close Vision : We are here to help. Mission : The mission of Grameen Phone Ltd. is to know its customers expectations, knowing the employees and organizing the employees. Values:

Make it easy: Grameen Phone tries to make its customers life easy.

Keep promises: Grameen Phone Ltd. believes in actions not words.

Be inspiring: It emphasize on creativity.

Be respectful: Grameen Phone Ltd. acknowledge and respect local culture.

CORE PRODUCTS AND SERVICES

a) Prepaid packages: smile, aapon, bondhu, djuice, shohoj, village phone, ekota, business solution, internet sim

b) Post paid packages: xplore, ekota, business solution, internet sim

c) Value added services: SMS, MMS, GSM features, EDGE packages, call conferencing, miss call alert, welcome tune, call block service, etc

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MANAGEMENT STRUCTURE

GrameenPhone Ltd. has approximately 6000 employees working at different levels of organizational hierarchy. There are 9 functional departments engaged in managing these employees with the aim to meet organizational objectives. GrameenPhone follows a mix of centralized and decentralized decision making processwhere the top management mainly takes all the strategic decisions while the functional managers have flexibility to take decisions by themselves on a day to day basis. At GrameenPhone the Managing Director is assisted by 9 Senior Executives who are heading different departments in the strategic decision making process. The departmental names of Grameen Phone are given below: Corporate Affairs Division Customer Service Division Finance Division Human Resource Division Information Technology Division Internal Audit Division Internal Control Office Division Marketing Division Network Division Public relation division Sales division

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HUMAN RESOURCE MANAGEMENT

Within the direction from the CEO of GrameenPhone, the Head of HR shall ensure that the HR function within GrameenPhone at all times is aligned with and supports the realization of GrameenPhones business objectives.. The units in HR Division include: HR Operations Recruitment & Selection HR Development; Health, safety, environment Expatriate and travel support

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Job Analysis: In Grameenphone, every management job is to have a stated purpose and a list of major responsibilities. These should be clearly described and agreed between the incumbent and the superior. The job is to be graded according to its nature and the level of responsibility it carries. Whenever any significant change in the nature of responsibility takes places, the Job Description and specification should be amended accordingly. ii) Human Resource planning : Grameenphone provides ample opportunities to grow. Promotion is based both on seniority and performance. The performance of each employee is reviewed every 6 months and the employees worth in the company depends on that. The employees designation in the first two years is completely time dependant. However, the employees at the same level can be paid more or less depending on his performance. iii) Recruiting and Selection: In Grameenphone, The recruitment practice is done mainly on two standard procedure of recruitment. They usually carry out in-house recruitment and/or post online job ad posting. They usually recruit fresh graduates and allow them to grow in the company. Applications received are carefully filtered and usually call a handful of candidates for the post. iv) Training and Development: Grameenphone, usually the first three months act as the probationary period for the fresh recruit. This also acts as the training period for the employee. In these 3 months, the employee is tested indirectly and monitored and his/her calibre judged and hence the management takes the decision of where to place him. v) Compensation: In Grameenphone, the job classification is linked to a salary grade through which a compensation package is made available to the incumbent of a job..

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FINANCIAL INFORMATION: GP has a dynamic management composed of business people with a profile drive, prepared to take calculative risk. The shareholders of the company are stable, established companies with solid international reputation. They have already made approximately $125 million investment to GP and will reinvest their profit share to GP. In 2008 the company went public. The GrameenPhone network is designed with latest computer assisted design technology. GP has reached its breakeven point in the year 2000, in the fourth year of its operation. The company made its first net profit of $ 3.7 million during the year ending in December 2000. Grameenphone Ltd. (GP) reported BDT 2,283 crore revenues for the third quarter of 2011, a strong 18% and BDT 349 crore increase from the corresponding period of 2010.

MARKETING The main objective of marketing department of GrameenPhone is to promote the brand name of the company and increase brand awareness among the customers.

Main Responsibilities The Department is responsible for: cell bazaar etc.) P&L; Telco feedback core products roadmap. opment of strategic alternatives, and evaluation & control of core product portfolio.

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EFFECTS OF GLOBALIZATION Globalization has two faces 1. Globalization of market 2. Globalization of product GP, the market leader in telecom business in Bangladesh, is a genuine example of the two version of globalization. First, its a joint venture between Bangladesh and Norway referring to the merging of historically distinct and separate national market into one huge global market place. Secondly, GP is a service oriented company. Using global sourcing, this company is able to lower their cost structure and improve the functionality of their service offering , thereby allowing them to compete more effectively in the global market place

THE ROLE OF TECHNOLOGY

Lowering trade barriers made globalization of market and production a theoretical possibility. Technological change has made it tangible reality. GP is heavily dependent on technology. After getting the license agreement in October 31, 1996, GP started hard work to develop the infrastructure facilities of the country. Within a short spell of time, GP began to operate in telecom sector . The technological knowhow and managerial expertise of Telenor has been instrumental in setting up such an international standard mobile phone operation in Bangladesh. Being one of the pioneers in developing the GSM service in Europe, Telenor AS has also helped to transfer this knowledge to the local employees over the years. GPs aim was to develop one GSM cellular mobile communications network in Bangladesh in competition with two other GSM operators and one AMPS (Advanced Mobile Phone System) operator. GP aims to provide the best possible technical quality, customer service, and coverage also in the rural areas at the most favourable prices, to as many customers possible in Bangladesh.

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FORIEGN DIRECT INVESTMENT Host county benefit: Resource transfer effect: GP is making positive contribution to Bangladesh by supplying capital, technology and management resources. Tax Revenue: GP is earning healthy amount of revenue and now it is one of the highest tax paying companies in the country . Employment effect: In Grameen Phone approximately 60000 employees are working at different organizational hierarchy. GDP: GP contributes to the GDP of Bangladesh, helping in economic growth.

Host country cost: 1. Adverse effect on competition: Local producers face intense competition, causing decline in business and may result in unemployment. 2. National sovereignty and autonomy: MNEs like Grameen Phone may interfere in govt. activities and pose threat to the sovereignty and autonomy of Bangladesh. However, as there are certain number of player in the telecom sector in Bangladesh, the adverse effects on competition is still lower and benefit from competition is higher.

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SWOT ANALYSIS STRENGTHS Good Ownership Structure Market Leader Large Network Coverage Brand Name. Skilled Human Resource Financial Soundness High Ethical Standard WEAKNESSES Culture Gap. Complicated Pricing Structure. Offers contain problems Different Departments are not Working Together

OPPORTUNITIES Economic Growth of Bangladesh New and Better Interconnection

THREATS More Rigid Government Regulations Upgraded Competitors Political Instability Devaluation of Taka Risky Position of Valuable Resource Noncooperation of Government for the Revenue of BTTB Technology Used by

Agreement Huge Demand for Telecom Services Increased International Activities in Bangladesh Declining Prices for Handsets Flexibility of Mobile Phone

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CHALLENGES PERSPECTIVE

FACED

BY

GRAMEEN

PHONE-

AN

International

Business

1. Dispute regarding tax payments: In the year 2011, during their operation in Bangladesh a dispute regarding the payments of outstanding tax of Tk 3,034 crore (US$395 million). According to the audit reports, GP must pay the outstanding amount by October 23rd, otherwise the regulator might take legal action. Theoretically, the regulator could block the renewal process for the company's GSM license during the legal process. The company had criticized the regulator's audit by issuing a line-by-line rebuttal of the audit, pointing out what it claimed had numerous mistakes and incorrect assumptions being made. At the end the company managed to resolve the dispute. But the tax collector had sent the company a warning letter that late payment would trigger a court order allowing it to block access to the company's bank accounts.
2. Downsizing and Job Cuts: The most recent and most publicized problem of Grameen Phone is the recent job cut. This is not a new problem but in the year 2012, it has taken the face of national problem for Bangladesh.

After Grameen phone management have decided to cut down many of its wings, termination its permanent employees occurred. Some of the employees have complained that Grameenphones management has threatened them to submit their resignation letter otherwise they will be mentally humiliated.Even in some cases the company had forced some of the female employee to attend the interviews during their maternity leave and terminated their employment contract as claiming the employee is less productive for the company. This is a violation of Bangladesh Labor Act 2006. Normally Multinational corporations do not patronize Labor Unions but the sudden job cut has organized employees under the banner of Grameenphone Employees Association. They have placed their demands as the six-point charter of demand to the GP management which includes : immediate end of the unethical job cuts, proper compensation for the terminated employees,
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revised increment policy, 5 per cent profit sharing and departmental action against corrupt employees.

RECOMMENDATIONS
GPs contradiction against BTRCs claims implied two major concerns. One, the procedures for BTRCs audit of the telecom company was not of international standard. Two, the auditors were not from an international audit firm. BTRC has to eliminate these two implied concerns of Grameen Phone and international observers. Therefore, at this point the easiest solution for BTRC should be to appoint an international auditor like KPMG or Ernst & Young. For countries like Bangladesh, hiring international auditors for internal regulatory audit sounds ridiculous given the costs associated with it However, given the large sum of unpaid tax/fees that the BTRC can potentially recover from Grameen Phone, the cost of such audit should blur in comparison to its benefits. Regarding the problem of downsizing, govt. of Bangladesh should take appropriate actions since it adds to the problem of already massive unemployment of the country.

The National Human Rights Commission and Bangladesh Telecommunication Regulatory Commission should asked GP to explain its move to downsize its workforce. The ministry of Commerce should arrange negotiations to come to a solution which does not deteriorate the macroeconomic conditions of the country, at the same time manage to attract FDI such as GP for the country. The ministry should arrange negotiations, the solutions of which should be fair and mutually beneficial for both parties.

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CONCLUSION After an in depth analysis on the management style and practices of Grameen Phone, we can come to a conclusion that GP is one of the well structured and highly organized MNE operating in Bangladesh. Like any other international business enterprise, it does have its limitations and faces multiple challenges. The govt. of Bangladesh should take care in maintaining proper relations with such MNEs, since they are a major contributor to the GDP and economic growth, and creates jobs in this country.

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REFERENCE 1. Grameen Phone Annual report 2010 2. www.grameenphone.com 3. http://en.wikipedia.org/wiki/Grameenphone 4. Internship report on customer satisfaction of Grameenphone Limited by Md. Harun-OrRashid, Brac University, Dhaka.

TOTAL 2483 WORDS ( EXCLUDING COVER PAGE & TABLE OF CONTENTS)

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