Resource-based analysis of MTN and the implications for future strategy Introduction
The purpose of the analysis is to investigate the internal capabilities and primary resources of MTN and what implication these have on the strategy of the organisation and the competitive advantage might be levered from them. The resource analysis is based on the financial yearend reporting of December 2009 (MTN) Resource audit
In conducting the resource audit, the classification of the different type of resources derived by Grant will be used, see Figure 1 Link between resources, capabilities and competitive advantage (Grant, 2005). These resources, combination leads to the operational capabilities of the organisation.
Classify and assessing of these different types of resources is done as per Grant (2002) as following: Tangible resources
Tangible resources are resources that can be acquired or traded rather easily. These include the physical infrastructure of the organisation, the financial capabilities and assets that the organisation holds. These resources can be easily copied and holds only limited feasibility for maintaining a competitive advantage. Financial resources
Revenue growth indicates profitable returns for MTN which are indicative of further expansive strategies. EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization), which is an indicator of the organisations cash flow is up 6.7% to R46.1 billion. MTN Group
Table 1 MTN 2009/2008 Current Ratio
A ratio under 1 suggests that the company would be unable to pay off its obligations if they came due at 2009. This shows that MTN not in good financial health and might be overextending itself. However the current ratio reflects a lower cash balance due to high capital expenditure and less debt acquisition. Since EPS (Earnings per Share) has risen to 8.5% to 878.9, it indicates a positive reflection by investors and the desirability of the shares which is favourable in the event that funds need to be raised. Physical resources
The MTN group is currently in the process if investing in new markets; utilizing state of the art equipment and implementing of best practice guidelines for site build and network management. The strategy of investing in ISP (Internet Service Providers) in all regions and investing in various submarine cables has paid dividend and tends to a competitive advantage due to vertical integration. The market value of assets is depreciating substantially at 18.8% due to nature of technology utilised. This might influence future strategies in that consolidation might need to take place to refit equipment before expansion can continue. Intangible resources
MTN is mainly first entry into many regions and capitalising on brand recognition and repeat business due to brand diversity over the entire industry. The application of first to market of technology such as Mobile Money, tend to lend itself to building a reputation of innovation by its customers in the industry. Human resources
The improvement of operational efficiencies through centralised procurement, best practice guidelines for site build, network management, safety and activity based costing is largely due to the skill of professionals employed. This and the collaborational abilities and know-how of staff to communicate the business objectives across the various markets is of substantial benefit to the organisation, allowing it to easily expand into new regions/markets. The importance of the human resources component can be reflected in the employee benefits payouts for the year totalling R5,843 million. Value chain/ operation capability analysis
The value chain analysis of MTN is based on Porter’s value chain; see Figure 2 Porter's value chain (Porter, 1985)
As a result, the following capabilities are extracted:
Value chain analysis from a...
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