3. RESOURCE-BASED ANALYSIS OF TELKOM
AND IMPLICATIONS FOR FUTURE STRATEGIES3-4
3.1 RESOURCES AND CAPABILITIES4
3.1.3 COST ADVANTAGE AND
3.1.4 COMPETITVE PRICING AND VALUE GROWTH6
3.1.5 VALUE CREATION6-7
4. ARE THE STRATEGIES SUSTAINABLE OR NOT?7-9
5. EXTERNAL FORCES PLAYING A ROLE9
6. INTERNATIONAL MARKET9-10
7. CONCLUSION AND RECOMMENDATION10-11
In order for me to undertake a resource-based analysis of Telkom and whether or not they are appropriate for Telkom and the implications it holds for the future strategy of the company, I would like to firstly refer to the Definition of a resource-based view.
The resource-based view (RBV) is a business management tool used to determine the strategic resources available to a company, in this instant I will be looking at Telkom. The fundamental principle of the RBV is that the basis for a competitive advantage of a firm lies primarily in the application of the bundle of valuable resources at the firm's disposal (Porter, 1998).
When a firm sustains profits that exceed the average for its industry, the firm is said to possess a competitive advantage over its rivals. The good of business strategy is to achieve a sustainable competitive advantage.
Michael Porter identified two basic types of competitive advantage:
1. Cost advantage;
2. Differentiation advantage.
A competitive advantage exists when the firm is able to deliver the same benefits as competitors but at a lower cost (cost advantage), or deliver benefits that exceed those of competing products(differentiation advantage). A competitive advantage enables the firm to create superior value for its customers and superior profits for itself.
Cost and differentiation advantages are known as potential advantages since they describe the firm’s position in the industry as a leader in either cost or differentiation. A resource based view emphasizes that the firm utilizes its resources and capabilities to create a competitive advantage that ultimately results in superior value creation (Porter, 1998).
3. RESOURCE-BASED ANALYSIS OF TELKOM AND IMPLICATIONS FOR FUTURE STRATEGY:
Telkom is a telecommunication service provider, providing integrated voice and data services through its land line and wireless networks into Africa and other countries. The following diagram combines the resource-based and positioning views to illustrate the concept of competitive advantage which I will be using to discuss Telkom’s analysis:
3.1 RESOURCES AND CAPABILITIES:
In order for Telkom to develop a competitive advantage, they must have resources and capabilities that are superior to those of its competitors, like MTN, Cell C and smaller telecommunication services. Without superiority, Telkom’s competitors could simply replicate what Telkom is doing and any advantage would disappear (Porter, 1998).
This would be Telkom’s specific assets, useful for creating a cost or differentiation advantage and that few of the competitors could easily acquire. Telkom has been steadily increasing its presence in high-growth, multi-service SSA markets. Thanks to several strategic acquisitions since early 2007, its geographical footprint now encompasses the length and breadth of Africa, excluding only Northern Africa. • The first acquisition outside South Africa was Africa Online, an Internet service provider operating in nine African countries: Cote d’Ivoire, Ghana, Kenya, Namibia, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe. Telkom acquired 100% of...