Case Study - PepsiCo in 2007: Strategies to Increase Shareholder Value (Which Strategy Co. Follow)

Case Study - PepsiCo in 2007: Strategies to Increase Shareholder Value (Which Strategy Co. Follow)

WHAT IS THE CASE ABOUT?

WHAT IS THE CASE ABOUT The yarn of Zimbabwean entrepreneur Strive Masiyiwa in his quest to obtain a mobile telecommunications license. First the Post & Telecommunications Corporation of Zimbabwe (PTC) & then the Ministry of Information, Post & Telecommunications of the government of President Robert Mugabe placed many obstacles in his path, but Strive challenges their decisions & actions in the High Court and the Supreme Court. Throughout this five year process (1993-1998), he remains determined to obtain the license through ethical means. A number of individuals and organizations impressed by his values and come to his help and this assistance, along with the independence of the Judiciary, is instrumental in his firm being given the license in July 1998. The case represents an in-depth study of a successful example of “Resistance to political corruption”.

INTRODUCTION:

INTRODUCTION Strive Masiyiwa was B orn in 1961 in Zimbabwe. Higher education : Went to Britain and obtained a Bachelor’s degree in Electrical and Electronic Engineering from the University of Wales . Work Experience: Strive returned to Zimbabwe in 1984 and joined the Zimbabwe Posts and Telecommunications Corporation ( PTC) as Senior Engineer. Masiyiwa was part of the second wave of black managers to join the PTC, whose management at that time was predominantly white First Entrepreneurial Venture: Retrofit(electrical firm)

HURDLES:

HURDLES PTC’s rejection of proposal. Legal challenge & proceedings. Presidential decree barred the establishment of any private mobile networks-offenders were subject to 2year jail term. Constitutional challenge. Establishment of Netone & Telecel consortium. Again Strive went to court auguring Telecel dint meet the tender specification & should be disqualified. Success In 1997 Strive won both the cases & was granted license to operate. Supported by vice president,Joshua Nkomo , Won bid for 15 year GSM network in 1998. Launched mobile phone service & got listed in Zimbabwe stock exchange. Popularity increased due to its innovativeness,resistence , innovative product range & low price. Became market leader in 2006.

EXPANSION & SHAPE:

EXPANSION & SHAPE Econet Wireless is a diversified telecommunications group. O ffering products and services in the core areas of mobile and fixed telephony services, internet and satellite. Econet was the first mobile cellular company in the world to introduce a mobile news service of the BBC World News and South African Broadcasting Corporation news. First operator from an emerging market to own a 3-G licence in an OECD country in New Zealand First African telecoms company to build an international satellite hub in the UK & having 11 million subscribers in five networks . Key Executives a) Mr. Strive Masiyiwa b) Mr. Douglas Mboweni Founder Chief Executive Officer of Zimbabwe c) Mr. Zacharya Wazara d) Mr. Bernard Fernandes Group Chief Technical Officer Executive Director South Africa,Kenya,UK , Newzealand,Zimbabwe Nigeria,Botswana,Lesotho

Pioneering:

Pioneering Econet is a company committed to finding the best way forward in a fast moving and highly competitive technological field. To remain at the top, we shall relentlessly pursue innovative solutions, and constantly grow our knowledge base with uncompromising passion for excellence.

PROFILES OF THE STRATEGIES AND POSITIONS OF AFRICA`S BIG FIVE MOBILE OPERATOR.:

PROFILES OF THE STRATEGIES AND POSITIONS OF AFRICA`S BIG FIVE MOBILE OPERATOR.

Big five Mobile operators in African market:

Big five Mobile operators in A frican market Millicom MTC (Mormon times company ) MTN(mobile telephone network) ORASCOM VODACOM

1.MILLICOM..:

1.MILLICOM.. LUXEMBERG based company formed in 1990. 1 st mover in acquiring operating licenses in the developing world. Out of 13 million subscriber world wide (3.2 million in Africa) Us$1.4 billion total revenue in that 200 million contribution was from Africa. In Africa Milliocom were operating in 7 countries (in 4 challenger status+ 3market leader status) The biggest market for millicom in Africa was democratic Republic of C ongo (population 60 million) where it had 100%ownership of local mobile operator

STRATEGY POINT OF VIEW…. :

STRATEGY POINT OF VIEW…. Mass market strategy, anchored around the appeal of low pricing. Multi branding strategy ,using millicom brand In only 3 market (Chad, Sierra Leone and Laos)out of 16 market. Investment strategy ,going for relatively low population market with a sprinkling of relatively high population market and a less aggressive business approach. Millicom was weakest competitor of the big 5. Targeted by china mobile for take over but due to unsatisfactory price deal failed. However several other player were interested in acquiring M illicom.

2.MTC….:

2.MTC…. 1 st mobile operator in Africa and middle east established in 1983. It had revenue of US$ 3billion during first 9 months of 2006. Employed 12000 people and had operation in 6 middle east and 14 African countries. Market capitalization at the end of 2006 was approximately us$15 billion. In 2005 MTC acquire Celtel international , Mobiltel of S udan and vee -mobile of Nigeria. MTC Became Major Player With 23 Million subscriber.

MTC strategies…:

MTC strategies… Segmentation approach ,formidable competitive web in each segment that was difficult for competitors to penetrate. Investment strategy ,concentrate resources on large population market with relatively low mobile penetration rates ,fast mobile phone adoption rates.

3.MTN:

3.MTN Started in 1994,after winning the second of three phone operator licenses award by south African govt. Current work force of 8360. 10 million subscriber (versus 20 million for major competitor Vodacom) SA ,a market with population 47 million and mobile phone penetration rate 72%. In 2001 MTN acquired a license to operate in Nigeria most Populous country of Africa With 151 million people.

MTN acquired Investcom for US$5.5billion.it had regional office in IRAN where it had ownership interest in irancell . Most successful mobile operator in Africa in 2006,with total subscriber base 32 million. MTN had mobile phone license in countries with a total population close to 500 million.

Strategy…..:

Strategy….. MTN`s international strategy had two main element.. Leveraging existing business and growing new market. Exclusively focused on mobile phone operation ,providing a wide product range including 3G technology based services and strong retailing and franchising system.

4.Orascom :

4.Orascom Egypt based conglomerate with telecom revenues of US$1 Billion. It had 15000 employee , operation in mobile ,fixed line as well as internet in 9 market Egypt,Tunisia,Algeria,Iraq,Malta,Bakistan, Bangladesh,Zimbabwe and British Vergin island . 51% market share in Egyptian market, and it had 7 million mobile subscriber in Egypt.

Strategy….:

Strategy…. Penetration strategy by owning 19.3% of Hutchison Telecom,which had operation in eight Asian countries. Branding strategy,orascom were operatin by different name in different market like MOBINIL in Egypt, PAKISTAN DANGALINK in Bangladesh.IraQna in IRAQ,TUNISIANA in tunisia and TELECEL in Zimbabwe.

5.VODACOM…:

5.VODACOM… Us$3 Billion South Africa based company with 5300 employee. It was product of a 50-50 joint venture between V odafone group and Telcom SA. World`s largest mobile phone operator based on revenue(china mobile was biggest based on the no of subscriber. It was the least internationalized of the big 5 operating only five African courtiers. Its largest subscriber base was in South Africa. 59%Market share against MTN`s 35% and cell-c`s6%.

Strategy…:

Strategy… Market growth strategy,Like MTN V odacom also invested in 3G but ,not a single operator got expected profit that had deployed 3G Tecnology . Expansion strategy, they expanded their business to the country that were neighour to south Africa like Lesotho,Tanzania,DRC etc. It also tried to enter in to nigerian market via management contract with ECOET WIRELESS NIGERIA in 2004 but contract lasted only 2 months. They were planning to entered in nigeria again by Acquisition of gsm operator possibly GLOBACOM.