PEST Analysis

In the PEST analysis we will discuss the following things of Pakistan in which the company is going to start its business.  Political Factors  Economy Factors  Socio Culture Factors  Technological Factors

POLITICAL FACTORS
 Political instability  Not permanent rules and regulations  Govt. Change after 5 years then change the previous setups  Inherited politics  No implementation of laws

Political Instability
The political instability in Pakistan now a day has led to unthinkable environment in the country, which is a threat for any business including all the companies. In 2010 the tax rate was 15% but now due to instability the tax rate increases till 22% for mobile users. More politics instability we will discuss in following points.........

Not Permanent rules and regulations

In Pakistan there are not any rules and regulations regarding selections of politicians. Many theories and criteria and merits are there for the process of politicians selection. But unfortunately not any criteria or merit is accepted. Only the reference and money is here for the selection of politicians.

Govt. Change after 5 years then changes the previous setups

In Pakistan not any rule of changing the government that person who has more power or more money who wants to enter in the politics or government he may easily enter in the government. This process may take the durations of 5 years. In simple words the government changes easily within 5 years in Pakistan. The new person who makes new government that will change the all

those things or setups which the previous politician or group of politicians make for themselves or for the public perspective.

Inherited Politics
In Pakistan the politicians are the only those persons who take these entire thing from inheritance. In simple words that is the only inherited politics.

Not Implementations of Laws

All those rules and regulations which are mentioned in the books of government laws and regulations those arent implemented because these rules and regulations are made for the welfare of the public of Pakistan. But if they follow these rules then their interest will eliminate. Here the conflict of interest is occurred.

ECONOMIC ENVIRONMENT
In the economic environment we will discuss the following terms:  Interest Rate  Inflation Rate  Exchange Rate  Budget Deficit  Trade deficit  GDP  Reserves

Interest Rates
The interest rate in Pakistan as benchmark was at 14.00%. In Pakistan the decisions of making interest rates are taken by the (SBP) State Bank of Pakistan. The discount rate is the official interest rate. From 1992 until 2010, Pakistan's interest rate was 12.78% and historical high rate of 20.00% in October 1996 & the lowest rate in Pakistan were of 7.50% in November 2002 as a record.

Inflation Rate
In Pakistan the inflation rate was at 13.04% in April 2011. And from 2003 to 2010, the rate of inflation in Pakistan was 10.15% reaching an historical high of 25.33% in August 2008 & low of

1.41% in July 2003 as a record. Inflation rate defines the rises in prices measured against a standard level of purchasing power.

Exchange Rates
In 2010 we can see that our most trading currencies just like UK Pound and US Dollar were valued as 121.6 and 84.05 Rupee per Pound & Dollar. But in 2011 we can see that the trading currencies rates are totally different from the previous year 2010 just like UK Pound and US Dollar are valued as 140.7 and 87.3 Rupee per Pound & Dollar.

GDP Growth Rate & GDP

The Gross Domestic Product (GDP) in Pakistan 3.76% in 2009-10 year. And from 1998 to 2009, Pakistan's annual Growth rate of GDP was 4.92% reaching an historical high of 9.00% in December 2005 & low of 2.00% in December 2001 as a record. And according to the World Bank, Pakistan (GDP) Gross Domestic Product is $167 Billion or 0.27% of the economy of the world. And from 1960 to 2009, Pakistan's (GDP) Gross Domestic Product was $43.16 Billion reaching an historical high of $166.55 Billion in December 2009 & low of $3.71 Billion in December 1960 as a record.

Pakistan Population
The total population in Pakistan is extended from 45.9 Million in 1960 to 175 Million in 2010, and it was increased 382% only in 50 years. Pakistan has 2.54% of the total population of world which means that one person in every 39 persons is resident of Pakistan.

Pakistan Balance of Trade

Pakistans trade deficit is equal to the USD 920 Million in March 2011. Pakistan exports rice, textiles, clothing, leather goods, furniture, tiles, marble, cotton fiber, cement, carpets & rugs and products of food. Pakistan imports many things but main things are petroleum & petroleum products, transportation equipment, machinery, plastics, edible oils, iron & steel & tea paper & paperboard. It has many trading partners but the main trading partners are European Union, The United Arab Emirates, China &The United States.

Pakistan Jobless Rate

The jobless rate in Pakistan was at 5.50% in December 2009 or in January 2010. From 1990 to 2010, Pakistan's Jobless Rate was 5.88% reaching an historical high of 8.27% in December 2002 & low of 3.13% in December 1990 as a record. We can define the labor force and non labor force as under The number of people employed plus the number unemployed but seeking work. And the non labor force includes those who are not looking for work, those who are institutionalized and those serving in the military.

Overall Economic Analysis of Pakistan Indicators Interest Rate GDP Growth Rate Inflation Rate Jobless Rate Exchange Rate GDP %age & Amounts 14% 3.76% 13.04% 5.50% Rs 87.300 $ 167 Billion 10.745 Trillions $17.3 Billions $920 Million 175 Million

Total Debts Reserves Trade Deficit Pakistan Population

SOCIO CULTURAL ENVIRONMENT

 Religious Country  97% are Muslims  77% Sunni Muslims  20% Shea Muslims  3 % Christians, Hindu, Sikh or Other Beliefs  Individualism & Collectivism As Pakistan is an Islamic country, so after the publication of cartoon in the newspapers of Norway and Denmark related to Holy Prophet PBUH influenced Telenor Pakistan. The offices of

Telenor were burnt down in Pakistan. After that mishap, Telenor built its goodwill with great hard work and consistency.

TECHNOLOGICAL FACTOR
 Improvement in industries  Improvement in communication  Improvement in education sectors (Virtual University)  Change in Automobile Telecommunication industry is influenced heavily by the technology introduced and being used in the market by the company and its competitors.

Industry Analysis
Porter Five Forces I. II. III. IV. V. No of Competitors Threat of New Entrance Bargaining Power of Suppliers Bargaining Power of Buyers Threat of Substitute

No of Competitors
 There are five operators in the Market of Pakistan.  But the competition is very tough.  The margin of profitability is going less because of this great and tough competition. As at 31 March 2010, Telenor Pakistan had a market share of 24%. In addition to Telenor Pakistan, there are four other telecom organizations are there in Pakistan such as Mobilink, Ufone, Warid & Zong (Formerly Paktel). Based on the Pakistan Telecommunication Authority numbers as at 31 March 2010, Mobilink was the largest mobile operator in Pakistan with a market share of 33%, Ufone had a market share of 20%, Warid was the market share of 17% & Zong had a market share of 7%.

Threat of new entrance

 Not easy to enter in this capital intensive sector just like telecom sector.

 So Threat of new entrance is low in Pakistan  Because it is very difficult to take risk for a new investor regarding with  High fixed costs  Not issuance of licenses by Government the only way to enter in this sector is acquiring the organization or merges with another organization.  Serious competitors It refers to the threat of new competitors to the existing competitors in this industry. This profitable industry attracts more competitors who are looking for achieving the high profits. If it is easy for these to enter in the market then we can say that it will possible only in the case if barriers to entry will low. These firms are competing already this big threat to in that market. If any other organization wants to enter in this big competition or wants to increase production capacity then that company cannot do anything without increasing in consumer demand. A high threat of new entrance may make the more competition in the industry or it makes more competitive & decreases the profit margins of the all existing competitors. And if we see on the other side, the low threat of entry makes the less competition in the industry or makes the less competitive & increases the profit margins for the all existing competitors.

Bargaining Power of Suppliers

The bargaining power of suppliers is also described as the market of inputs. Suppliers of components, labor, raw materials & services which become the power of the firm it is valid only in the case that when there are some or few substitutes. Suppliers may refuse to work with the firms and may charge high prices for their unique resources or unique material. In the telecom industry in accordance of Mobile Phone sets there are many suppliers but the main supplier or the leader is Nokia.

But now Chinese Cell market is breaking the leadership of Nokia.

So the bargaining power of suppliers is becoming medium.

Bargaining Power of Buyers

The bargaining power of customers is also described as the market of outputs or the ability of customers to do all the things according to their requirement or in simple words the customers put the organizations under pressure, which makes the great affect customer's kindliness regarding changes in price.  The bargaining power of buyer is Higher  When low switching cost  Availability of substitutes with more facilities  With increased choice of telecom products and services, the bargaining power of buyers is rising.

Threat of Substitute
The threat of substitute is low in the Pakistan in this telecom industry because there is not any substitute or alternative product or services of mobile phones.

Over All Industry Analysis of Telenor Indicators High/Low

Threat of New Entrance

Low

Bargaining Power of Suppliers

Medium

Bargaining Power of Buyers

High

Threat of Substitute

Low

Market Segments Telenor divide its market into two major segments those are:  Postpaid  Prepaid y y Value Chain For Prepaid Customers Talkshawk Djuice

Value Chain for Postpaid Customers

Organizational Structure of Telenor

 Total Overall Strength of Telenor  Top Managers  Middle Managers  Line Managers  HR Department  Director  Vise President  Middle Managers  Line Managers  Major Services  Caller time identification  Call waiting  Call holding  Call forwarding  SMS  Fax and data services 01 04 16 26 75 750 3675

 Mobile TV  Entertainment and many more

Organizational Culture
The culture of Telenor can be defined in following points:  Supervision  Individualism  Masculinity Supervision  They are using the centralized & decentralized control because they know that by this independent style they are creating two things: i. More Productivity (Production) ii. Cooperation between employees and good relationship Individualism  Employees give preference to their own interest  Some employees are working against organizational interest  Therefore they are using the Centralized and Decentralized method at different places Masculinity  It means gender discrimination or merit based things  Rules are made for people not for confuse them  In Telenor equal opportunities for male as well as female

Marketing Issues
 In the Telenor they are using the different marketing tool for promotion and sales of their product just like  Print adds  Video adds  Banners, Bill Boards  Marketing on Internet etc

SWOT Analysis

Strengths of Telenor
 Good Network Quality and design  Superior Customer Care  Financial Strength from Denmark  Excellent Coverage & Distribution  Contract with Siemens & Nokia  Better Customer relationship than competitors  Committed And Efficient Staff  Products innovations ongoing  Good reputation among customers  Good packages according to the target market

Weakness of Telenor
 Less time in market as compared to other cellular companies, like Mobilink  Less coverage as compared to the competitors like Mobilink  Less experienced employees than competitors  Not able to capitalize on start

Opportunities of Telenor
 A developing market  Mergers joint ventures or strategic alliances  Decline of major competitors  E-Commerce Usage  Technologically better environment  New Launches  More customers on newer products introduce

Threats of Telenor
 Emerging companies in market  Unstable political Conditions  Wireless Technology at Boom  High Public Expectations

 Low Prices of competing brands  Propagandas attacking We shall create growth by being preferred by customers, and we shall deliver the services required in a highly cost effective manner. Future expected strategies for Telenor 1. Create top-line growth through being preferred by customers Competition for existing customers is increasing in many of our markets with higher market penetration levels. In addition, new ecosystem players are challenging core service revenues and customer relationships. It is increasingly important for us to win and retain existing mobile subscribers, and to strengthen the ties we have with customers. The telecom industry has in general a significant value potential in improving how they interact with customers. 2. Be a highly cost efficient operator Continuing business success depends on our ability to provide services in a highly cost effective manner. 3. Create value and growth from financial and asset management In addition to manage current operations for growth and cost effectiveness, we aim to optimize the portfolio and create value both from acquisitions and divestments. We will do this while making sure to provide attractive remuneration to our shareholders.