Reviewing of 10 research paper about corporate strategies and apply them into Viettel Telecom

MIDTERM EXAMINATION
Subject: Strategy Formulation and Implementation
Lecturer: Dr. Nguyen Ngoc Duy Phuong

Reviewing of 10 research paper about corporate strategies
and apply them into Viettel Telecom

Group 12:
1. Lê Thị Thuý Quỳnh – BABAIU19305
2. Trần Nguyễn Nhật Quyên – BABAIU19300
3. Lê Thị Thiên Thảo – BABAIU19323
4. Phạm Thị Thu Thảo – BABAIU19319
5. Nguyễn Thu Thảo – BABAIU19324

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Table of Content:

Abstract ........................................................................................................................ 3
Introduction ................................................................................................................. 3
Literature Review ........................................................................................................ 4
1. Offensive strategies ................................................................................................ 4
1.1 Market penetration ............................................................................................... 4
1.2 Product Development ....................................................................................... 6
1.3. Market development ........................................................................................ 7
2. International market strategies ............................................................................... 7
2.1 Subsidiary ......................................................................................................... 7
2.2 Foreign market entry......................................................................................... 8
2.3 Joint venture...................................................................................................... 9
3. Outsourcing .......................................................................................................... 10

Apply selected strategies into Viettel Telecom ........................................................ 11
1. Viettel Telecom - International market entry strategy ......................................... 11
1.1 General overview of Viettel's international market penetration process ........ 11
1.2 Evaluation of Viettel's international market penetration strategy in recent
years ...................................................................................................................... 12
1.3. Solutions to complete Viettel’s international market penetration strategy .... 13
2. Viettel Telecom – Offensive strategy................................................................... 14
Conclusion .................................................................................................................. 15
Reference .................................................................................................................... 16

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Abstract
Viettel is a telecommunication company that is very large and popular in Vietnam, so they
have to change and apply many new strategies to gain inferiority towards its competitors. This
review paper intends to bring a better knowledge of two strategies in the telecom industry that
can apply to Viettel. This review article provides a review of 10 papers dating from 2002 to
2019 that relate to the telecom industry. The purpose of this paper is to investigate the
telecommunication market situations over the world to help Viettel telecom come up with
appropriate strategies that can improve the situation. The paper summarizes the definitions
and evidences of the offensive strategy, and the international market strategies. Concepts of
two strategies had been used widely in companies and studied in many papers.
•

Keywords : Telecom industry, Viettel, the offensive strategy, the international market
strategies, literature review.

Introduction
Vietnam is currently integrating into the regional economy as well as the global economy.

This has resulted in a plethora of development opportunities for Vietnamese businesses.
However, because of the turbulent economic environment, which provides possibilities as well
as pressure for Vietnamese businesses to survive and grow, companies must adopt business
strategies that are appropriate for the current scenario.

In terms of telecommunications, it can be noted that existing significant firms in the field, such
as Vinaphone, Mobiphone, and others, all have a slow growth rate and a falling market share,
while Viettel Telecom is always expanding and reaching out. As a result, Viettel swiftly grew
to become the country's largest telecommunications company after 25 years of existence and
development. The business tactics that Viettel has established have undoubtedly played a vital
role in the company's success. However, maintaining its market position in today's fiercely
competitive environment is no easy task, necessitating the company's strategy building to be
regularly upgraded to match clients' wants. However, within the scope of this research, we
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only focuses on the entry strategies, offensive strategies and outsourcing strategy of large
telecommunications companies in many countries, thereby drawing lessons from those
strategies and applying them to Viettel.

Literature Review
1. Offensive strategies
1.1 Market penetration
- Personal selling and trade promotions are clearly the most effective promotional techniques
with which Essar Telecom Kenya Limited engages its sales team to make direct contact with
clients in order to market the company's products. The researcher finds that the company has
used both a pull and a push technique as a promotional strategy based on the findings of the
study. Essar Telecom Kenya Limited has been able to stay up with the competition in the
telecommunications industry by employing a variety of market penetration techniques for its
products in today's environment of fierce competition.

The study says that pricing penetration methods like setting lower prices rather than higher
prices to obtain a large and dominant market share have been a successful penetration pricing
strategy that has resulted in huge sales volumes and market shares.
It goes on to say that one of the company's methods for growing its market share is to use
market segmentation. Essar Telecom Kenya Limited's differentiation approach is significantly
relevant to its marketing goal.
- Income Level and Monthly Expenses of Telecommunication Service for Different Age
Groups. Firstly, with people under 19, they have low income levels. So, China Mobile and
China Unicom should develop tailor-customized service packages for young people,
especially students, who use SMS frequently but seldom make phone calls. Senior high school
students had a mobile phone but didn‟t have much money to spend on mobile services. “SMS”
and “Phone Call” became the most important functions. They also like cheap mobile services,
especially free “SMS” allowance. If China Unicom could provide them cheaper service
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packages with more free “SMS”, more young customers could be drawn to it. Secondly, to the
age group of 19-30 : SMS, Phone Call and Internet were used frequently. So, providing better
service with competitive prices will help China Unicom gain more customers and expand
market share. The group of 19-30 also have unclear preference in mobile services. “SMS” was
still the favorite communication method among young people while the use of “MMS” had
increased when compared to people under 19. “Internet” usage had been popular among this
group of people. “Phone call” was also being used often. So “3G” network can be an
opportunity for China Unicom to chat up China Mobile and expand customer groups through
the attractiveness of Internet services.Thirdly, to the age group of 31-60 : China Unicom's
market share was beginning to catch up to China Mobile's. But the market share of China
Mobile was nearly one time greater than the market share of China Unicom. The problem for
China Unicom was how to raise their attention and interest and motivate customers to buy
their product. They also are the major labor force and they are responsible for the society’s
major productivity. They have the most purchasing power but only use the simplest phone

calls. “SMS” was the second most popular function. So, China Unicom should create new
service packages that can provide them with useful and economical information services.
Lastly, to people over 60 who are retired, making phone calls with relatives is the most popular
utility. They also were phoned by their relatives rather than dialing themselves that generate
no direct expense. So China Unicom should find a new consuming pattern and purchasing
habit for them.
Income Level and Monthly Expenses of Telecommunication Service for different
occupations. Firstly, “Education” sector is the major group that use “SMS” frequently..The
second and third largest “SMS” groups were “Economy” and “Industry”. China Unicom can
provide them with service packages that give free “SMS” than ordinary packages. “Phone
Call” can be less discounted to balance the package costs and remain competitive pricing. And
“MMS” was not popular for customers in Anqing City. “Education” were still the major users
of this function. Secondly, “Industry” sector and “Economy” sector are the major groups that
use “Phone Call” most frequently. Due to their occupations, direct and instant phone calls
communicate better with their business partners than indirect “SMS” or “MMS”. People who
were working in “Industry” sector and “Economy” sector preferred using “Phone Call”. So,
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China Unicom can use some tailor-made service packages which offer phone call discounts
with a few free “SMS” to attract business-related people and mid-aged working people.
Additionally, Students and young working people are the major customers of Internet
functions. And “Industry” sector and “Economy” sector had stronger purchasing power than
students and had similar “Mobile Internet” service requirements, but their expenses on
“Mobile Internet Service” were not as high as that of students. So, China Unicom utilizes their
advantages in 3G network and standard to get internet users. Economical Internet flow volume
packages can be added as additional packages to the main service package.

1.2 Product Development
- Product development is an important factor determining the success or failure of businesses

in the telecommunications industry. Take for example three telecommunication companies in
Kenya, namely Safaricom, Airtel and Telkom. They all implement product development
strategies very well.
Safaricom, Airtel and Telkom are all focused on new goods with one goal: optimizing
customer fit and reducing time-to-market. While these goals may pose conflicting
requirements for the organization, there is growing evidence that companies can succeed
because of the products they have.
Through many surveys, companies have received positive feedback from customers when
continuously upgrading products, integrating modern technology when it is launched. This
allows them to better serve consumer needs, stay ahead of slower competitors, and build brand
loyalty. Many studies have found a strong positive relationship between the speed and
commercial success of new products. However, the failure rate of new products is still very
high. Many R&D projects never produce a commercial product, and between 33% and 60%
of all new product launches do not generate economic returns. Therefore, the goal that
telecommunication companies in Kenya are aiming for is to reduce time to market by making
the product development process more efficient without compromising product or service
quality.
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1.3. Market development
- Through its aspirations to develop a countrywide fiber optic network, KC's offensive strategy
focused on spreading its business communications services (through its Torch subsidiary) to
leading UK regional business clusters. This linked (at least originally) the four major corporate
centers of Leeds, London (through COLT), Birmingham, and Manchester.
The move of KC into the East Riding of Yorkshire, which is next to its Kingston-upon-Hull
base, is the second part of its offensive plan. Because of the enormous number of previous
inhabitants and commuters to Kingston-upon-Hull, KC has a degree of brand loyalty and
familiarity.

2. International market strategies
2.1 Subsidiary
- They should improve the partnership with Vodafone by comparing Vodacom's operations
against worldwide standards of excellence, in addition to having exclusive access to new
product launches and global research and development skills. Vodacom's value proposition
and growth strategy are built around the advantages of being a Vodafone subsidiary. Expertise
and experience in communications are shared. Firstly, as the business matures, Vodacom will
need worldwide competence. Secondly, Vodafone has a very inventive and new style of
thinking, with access to world-class research and product innovation. Third, cost-cutting
procurement through global economies of scale. Vodacom has reaped the benefits of
Vodafone's purchasing power, and is now able to sell certain handsets at significantly lower
pricing. The next step is to compare your operations to worldwide criteria of excellence. The
Vodafone deal has given me a lot of confidence in being a part of a global company, and it
will be good for business. Finally, there is a strong brand association. Vodafone has a great
brand that will help Vodacom reinvent itself.

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2.2 Foreign market entry
- After noting that the Rwandan telecom market was a good market with a high degree of
demand for telecommunication services, Tigo chose the best entry strategy for effective
operations of the firms. As a result of what the corporation discovered, bigger returns were
expected.
According to the findings, Tigo employed a foreign direct investment approach to join the
Rwandan telecom industry by opening its branches in all of Rwanda's districts, focusing on
new markets, penetrating current markets, and developing new distribution channels. Firm
specific advantages such as ownership of proprietary products or technology, as well as a
desire to decrease administrative overlap and better integrate new product development and
launch initiatives, encouraged the company to pursue this method.

- Huawei began to standardize advertising when its products entered the European market
initially; advertising was often the sole leader and representative. This effectively reduces
costs, and to a large extent, it can well implement and control overall promotion goals. Then
they assess the situation in important locations, devise action plans, dispatch individuals to
various parts of the country, and prepare for permanent residence. To keep information
flowing and undertake ongoing product training, product marketers of Huawei and customers
actively communicate with one another. In addition, the company finds out the difference
between the European market and the domestic market and takes advantage of the relationship
between the embassies of the market countries in China.

Huawei's image is cultivated through the presentation. Exhibiting photographs and
commercial products is a key way to disseminate them successfully. Huawei holds a large
exhibition every time it enters a new school. The expo can be described as showcasing
Huawei's commercial image and a platform for face-to-face meetings. The purpose of the
operators participating in the exhibition should be to highlight operators' progress and
demonstrate high-level strength to the general public and experts at the exhibition. Aviation
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displays products, services, and applications and is the driving factor behind business growth.
The competitors are close in proximity, and if they do just a little better, they will create a
dramatic contrast against the fake. Aviation displays products, services, and applications and
is the driving factor behind business growth. The competitors are close in proximity, and if
they do just a little better, they will create a dramatic contrast against the fake.

- International market strategies are often favored by Chinese, Korean and Italian companies.
Chinese telecommunications companies like ZTE and Huawei have done a great job of
entering the African market.
While investing in Africa, Huawei and ZTE are more focused on customer needs and

requirements. They have established research and development centers in Africa, understand
their customers well, then develop specific strategies for R&D, joint ventures, project
contracting, mergers and acquisitions, as well as management and operation of
telecommunications. ZTE and Huawei always work with local telecommunications partners
and provide services that make customers happy. ZTE, on the other hand, costs 30 to 40
percent less than its European competitors. Improved technical capacity, low production costs,
access to state funding and state political support give Chinese telecommunications companies
a competitive edge. Huawei and ZTE not only have political relations with the Chinese
government but also with the host country's government. In recent years, China's outward FDI
model has really developed. Part of that is thanks to their very good implementation of
international market strategies, especially export strategies.

2.3 Joint venture
- Bangladesh mobile telecommunications market remains attractive for foreign companies,
and the optimal entry strategy is a joint venture to enter the attractive industry. For the same
reason, Grameenphone has used this method to expand enter the market. The international
shareholder of the company brings technological and business management expertise, while
the local shareholder provides a presence throughout Bangladesh and a deep understanding of
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its economy. Besides, they also use a promotion strategy. The company advertises in every
available medium, including television, radio, print, the Internet, bus bodies, and billboards.
Operators spend a lot of money on marketing, and they frequently hire top media producers
and performers to direct and act in TV commercials. Among our country's telecom companies,
Grameenphone has the most aggressive promotional campaign. Essentially, Grameenphone
employs advertising as a promotional technique to accomplish a communication task with a
specified target demographic at a specific time frame. GP offers a variety of promos to its
subscribers, including bonus talk time for night calls, free SMS, free t-shirt, and cap, among
others. GP advertised their product using both electronic and non-electronic media. In

addition, they have launched a new campaign called "Pothe Pothe" to boost sales.

3. Outsourcing
- Airtel first delegated management of all business operations to IBM8. It cut capital costs and
improved customer experience by leveraging IBM's information technology (IT)
infrastructure and standardized business frameworks.
It also outsourced telecom networks to Ericsson and Nokia, with the intention of receiving
paid for the use of its network infrastructure rather than an upfront payment. Airtel's capital
expenses were once again cut as a result of this. Airtel decreased the service rate for its
customers by adding new users without incurring extra fixed costs. Arrangements have been
struck with software service providers in addition to network infrastructure outsourcing.
The payment structure for outsourcing is an important component of the Airtel outsourcing
contract. Rather than paying for services based on the number of hours done or some other
traditional approach, Airtel's outsourcing partners are compensated based on the company's
revenue growth, which means that as the company expands and its demands on its service
providers grow, so does their income. Furthermore, the customer base grows without requiring
Airtel, which employs only a few hundred people, to hire more people.

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Apply selected strategies into Viettel Telecom
From the literature review, it could found that there were many companies have used different
strategies for their business. With our chosen company - Viettel Telecom, we will apply the two most
suitable ones, international market entry strategy and offensive strategy.

1. Viettel Telecom - International market entry strategy
In fact, Viettel has applied the international market penetration strategy for 15 years (since
2006).

1.1 General overview of Viettel's international market penetration process
At that time, Viettel has chosen to conduct parallel investment, exploit the domestic market
and combine investment abroad. According to Viettel, the research and development
investment to create new products or services account for the highest cost of all types of costs,
especially for high technology and services. Therefore, when the market can be expanded, and
services can be sold to many people, the price per unit of product will be lower. Those are the
reasons why Viettel decided to reach out to the world market.

Besides, in order to gain experience in competing with major players in highly competitive
markets, Viettel has actively invested abroad, building network infrastructure in many
different countries such as Cambodia, Laos, Myanmar, and North Korea, Cuba, Venezuela,
Mozambique, Tanzania, Peru,...

It can be said that Viettel has pioneered the integration of Vietnam's telecommunications
industry with the world by investing in infrastructure and providing telecommunications
services in foreign markets. With its efforts, Viettel has entered the top 100 largest
telecommunications brands in the world for the first time. This is not only the success of
Viettel but also the success of Vietnam's telecommunications industry because with the Viettel
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brand, for the first time, Vietnam has become a ranked and famous country on the world
telecommunications map.

1.2 Evaluation of Viettel's international market penetration strategy in recent
years

It can be said that expanding investment and exploitation in foreign markets is the right
direction for Viettel in terms of cooperation and integration. As a result, Viettel has established
itself and holds a high market share in countries such as Cambodia and Laos; reap certain

successes and achievements in the field of technology and telecommunications.

Besides the achievements achieved in the first steps to foreign markets, Viettel also
encountered many difficulties and limitations that need to be faced and overcome.

Vietnamese telecommunications enterprises do not have many competitive advantages
compared with other telecommunications enterprises, so they face many difficulties and
challenges when investing and doing business abroad.

Taking Cambodia as

an example, Viettel started

to penetrate

this

country's

telecommunications market with VoIP services, although Viettel decided to invest at a time
when this market only had one service provider, but this was the joint venture of the
Cambodian Ministry of Posts and Telecommunications, so they are strongly protected.
Therefore, Viettel faced many difficulties in connection when it officially raised the problem
from February 2006 to May 2006 to agree on the principle and in July 2006 signed the
necessary appendices to business. Another difficulty is that right after Viettel received the
official license to provide the service, immediately nine other operators were also allowed to
provide this service. Thus, the market went from monopoly to competition in just a few
months. Telecommunications businesses operating in Cambodia are mainly joint ventures
with foreign countries such as Sweden, Thailand, and Norway, so they have a lot of experience
and financial potential to compete. This is a huge challenge for Viettel.

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Moreover, the human resource problem of Viettel also encountered many obstacles. Viettel's
strategy is to train people to master technology and business knowledge so that Viettel's key
employees take on 10% of intellectual labor; the remaining 90% will be processed for simple
labor and outsourced. Therefore, it will take time for Viettel to train experts to send there to
work with an educated workforce. With 90% of the workforce outsourced, Viettel has to train
the whole thing from the beginning so that it will take a lot of time, costs, and difficulties due
to language and cultural factors.

1.3. Solutions to complete Viettel’s international market penetration strategy
- Training human resources towards ‘knowledge’ economy:

Post and telecommunications is a very sensitive field. The explosion of information
technology has had a strong impact on the production line, management style, lifestyle and
way of thinking of employees. Therefore, the process of training and developing human
resources not only needs to be dynamically adapted to changes, but also needs to be done on
the basis of foresight to cope with the trends of technology and service in the future.

To be able to penetrate and stand firm in the new market, businesses need to improve their
competitiveness compared to competitors. In fact, first of all, it is necessary to have a capable
and responsive workforce, in which training and development in the right direction and
selection will bring much higher efficiency. In the new stage of investing in foreign markets,
with limited highly qualified human resources, the Corporation needs to focus on training
many experts in the fields of science and technology, management, expertise, professional
economic service.

- Strengthen market research:

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On the basis of carefully studying market needs, enterprises can determine product strategies
to increase product consumption, expand market share, and improve economic efficiency.
Especially for businesses expanding overseas, market research becomes even more important.
Because the company's strategy will be affected by many factors, it requires acumen,
calculation and careful research to avoid risks when investing in new markets.

Due to its business in telecommunications - a diverse and specific field, market research for
Viettel is an indispensable requirement. The demand for telecommunications products and
services is always changing from day to day, so Viettel must periodically evaluate and review
each type of market to make necessary adjustments.

2. Viettel Telecom – Offensive strategy
As mentioned above, in parallel with the strategy of entering the international market, Viettel
also applies a parallel strategy to develope the domestic market.

When entering the market, Viettel has contributed to the popularization of mobile phones in
Vietnam. Next, Viettel created a big boom in Internet broadband thanks to 4G coverage to
97% of the population.

Up to July, 2020, Viettel has become the largest network operator in Vietnam with 65 million
mobile subscribers, accounting for 54% of the market share (in which 45 million data
subscribers) and 5.8 million fiber-optic Internet subscribers, accounting for 41.5% of the
market share. Viettel's telecommunications network is a super-broadband network with
360,000 km of fiber optic cable to most districts and communes with 120,000 broadcasting
stations and five storage centers meeting international standards.

In addition, since 2019, Viettel Telecom has focused resources on research and development

of 5G base stations and chips for 5G. From June 2020, they deployed a trial of 5G stations at

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the Ministry of Information and Communications. Currently, this operator is also continuing
to optimize the 5G network for large-scale deployment.

Viettel has now mastered monitoring, management, and combat tools in cyberspace. This
operator is also currently ensuring communications in border areas, islands, and military
transmission infrastructure.

Viettel is promoting the application of IT in the activities of the Government and businesses
with the implementation of national-scale projects, building payment infrastructure, and
mobile digital commerce, contributing to the creation of a 'digital' society.

Persisting in its mission of bringing technology to everyone, Viettel is always interested in a
group of customers who are vulnerable to the change of digital life. This humanistic
philosophy is fully expressed in the message when this business provides 4G services: "As
technology moves forward, no one will be left behind."

A strong marketing campaign has also contributed to promoting the development of Viettel's
brand. Most recently, is a change in the logo as well as the slogan. From "Say it your way" to
"Your way." This represents an open message for many new digital services of Viettel, not
just telecommunications as before.

In summary, based on Viettel Telecom's achievements, it can be said that the market
development strategy that the company has been applying is very successful.

Conclusion

This review paper provides an overview of offensive strategy and international market strategy
through 10 case studies of how businesses globally apply them in their business models, and
the implications of these two strategies. At the same time, these two strategies are also applied
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to Viettel Telecom Company to increase multidimensionality, specificity and accessibility.
From the successes that the offensive strategy and the international market strategy have
brought, it is clear that the importance and necessity of these two strategies cannot be denied.
However, both of these strategies still have many inadequacies, risks about economic and
political. Choose a difficult strategy that requires more challenge and investment. Thanks to
that, Viettel can show the bravery of a big brand when developing Vietnamese
telecommunications to the world.

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