Strategy Analyzing &
Preparation (part1)
Goals of This Class
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Where are we?
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What do you expect from this class?
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Overview of telecommunication strategies
Step by step to know how to analyze those
telecom firms and formulate strategies
Follow the textbook proposed framework to
analyze a telecom firm from formulation to
evaluation
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Outline of the Lecture
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What is a firm’s strategy?
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Process and nature strategy formulation
Financial and strategic objectives
Types of strategies
Review some financial index
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The Process of Strategy
Formulation
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Vision
Mission
Objectives
External audit (OT analysis)
Internal audit (SW analysis)
Past successful strategies
Alternative strategies (new strategies)
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The Nature of Strategy
Formulation
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Establishing long-term objectives
Generating alternative strategies
Selecting strategies to pursue
Best alternatives (achieve mission and
objectives)
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A Comprehensive Strategic
Management Model
Formulation
Implementation
Evaluation
Vision
Integrate
observation
& previous
info
Mission
Objectives
Strategy
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Measure
financial &
strategic
figures
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Financial versus Strategic
Objectives
Which one is more important?
Financial objectives
 Growth in revenues
 Growth in earnings
 Higher dividends
 Higher profit margins
 Higher earning per share
 Improve cash flow
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Financial versus Strategic
Objectives
Strategic objectives
 Larger market share
 Better QoS than rivals
 Quicken time-to-market than rivals
 Lowers costs than rivals
 Wider network coverage than rivals
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Financial versus Strategic
Objectives: Tradeoffs &
Contradictions
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Maximize short-term financial objectives could
harm long-term strategic objectives
Pursue increased market share at the expense
of short-term profitability (Promotion, MOD and
many others)
Tradeoffs related to risk of actions, business
ethics, social responsibility issues, preserve
natural environment
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Reverse Thinking: What Are
not Strategic Objectives?
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Managing by crisis
Managing by subjective
Managing by hope
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Types of Strategies: A Large Company
Corp
Level
Division
Level
Functional Level
Operational Level
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Types of Strategies: A Small Firm
Company
Level
Functional Level
Operational Level
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Types of Strategies: Classification
intensive
Product development
Market development
Market penetration
Offensive
Related
Diversification
Unrelated
integration
Defensive
Vertical: backward
Retrenchment
Vertical: forward
Divestiture
Horizontal
Liquidation
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Comprehensive StrategyFormulation Framework
Stage 1:
The Input Stage
Stage 2:
The Matching Stage
Stage 3:
The Decision Stage
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Strategy-Formulation Analytical Framework
Input stage
Internal Factor
Evaluation
(IFE)
External Factor
Evaluation
(EFE)
Competitive Profile
Matrix
(CPM)
Matching stage
SWOT
BCG
IEM
SPACE
GRAND
Decision stage
Quantitative Strategic
Planning Matrix
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(QSPM)
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Strategic Figures
 Market
share for its main services
 Growth ratios in market share
 Churn rates
 ARPU
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Financial Figures
Liquidity ratio:
 Leverage ratio:
 Activity ratio:
 Profitability ratio:
 Growth ratio:
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Liquidity Ratio
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Current ratio:
Current Assets/Current Liabilities
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Quick ratio:
Current assets minus inventory / Current liabilities
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Leverage Ratios
Debt to Total Assets Ratio:
Total Debts/ Total Assets
 Debt to Equity Ratio
Total Debts/ Total Shareholder’s Equity
 Long-Term Debt to Equity Ratio
Long-Term Debts/ Total Shareholder’s Equity
 Times-Interest-Earned Ratio
EBIT/ Total Interest Charges
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Activity Ratios
Fixed Assets Turnover:
Sales/Fixed Assets
 Total Assets Turnover:
Sales/Total Assets
 Account Receivable Turnover:
Annual Credit Sales/Accounts Receivable
 Average Collection Period:
Accounts Receivable/(Total Credit Sales/365)
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Profitability Ratios
(1)
Operating Profit Margin:
EBIT/Sales
 Net Profit Margin:
Net Income/Sales (After-tax profits)
 Return on Total Assets (ROA):
Net Income/Total Assets
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Profitability Ratios
(2)
Return on Stockholder’s Equity (ROE):
Net Income/Total Stockholder’s Equity
 Earnings per Share (EPS):
Net Income/# of outstanding common
shares
 Price-Earnings Ratio:
Market Price per Share/Earnings per
Share
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Growth Ratios
Sales: Annual % growth in total sales
 Net Income: Annual % growth in
profits
 EPS: Annual % growth in EPS
 Dividends per Share: Annual %
growth in dividends per share
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Thank You!
My contact information:
Email: [email protected]
Office: R62509
Telephone number: 06-2757575-53229
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