1. Strategy Analyzing & Preparation (part1)

2. Goals of This Class Where are we? What do you expect from this class?
Overview of telecommunication strategies
What do you expect from this class?
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
KuangChiu Huang

3. Outline of the Lecture What is a firm’s strategy?
Process and nature strategy formulation
Financial and strategic objectives
Types of strategies
Review some financial index
KuangChiu Huang

4. The Process of Strategy Formulation
Vision
Mission
Objectives
External audit (OT analysis)
Internal audit (SW analysis)
Past successful strategies
Alternative strategies (new strategies)
KuangChiu Huang

5. The Nature of Strategy Formulation
Establishing long-term objectives
Generating alternative strategies
Selecting strategies to pursue
Best alternatives (achieve mission and objectives)
KuangChiu Huang

6. A Comprehensive Strategic Management Model
Formulation
Implementation
Evaluation
Integrate observation & previous info
Vision
Measure financial & strategic figures
Mission
Objectives
Strategy
KuangChiu Huang

7. 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
KuangChiu Huang

8. Financial versus Strategic Objectives
Larger market share
Better QoS than rivals
Quicken time-to-market than rivals
Lowers costs than rivals
Wider network coverage than rivals
KuangChiu Huang

9. Financial versus Strategic Objectives: Tradeoffs & Contradictions
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
Ask students to provide some examples about Maximize short-term financial objectives could harm long-term strategic objectives
KuangChiu Huang

10. Reverse Thinking: What Are not Strategic Objectives?
Managing by crisis
Managing by subjective
Managing by hope
KuangChiu Huang

11. Corp Level Division Level Functional Level Operational Level
Types of Strategies: A Large Company
Corp Level
Division Level
Functional Level
Operational Level
KuangChiu Huang

12. Types of Strategies: A Small Firm
Company Level
Functional Level
Operational Level
KuangChiu Huang

13. Types of Strategies: Classification
Product development
intensive
Market development
Market penetration
Offensive
Related
Diversification
Unrelated
integration
Vertical: backward
Retrenchment
Defensive could take Fitel as a suitable example “WiMAX and PHS”
Vertical: forward
Divestiture
Defensive
Horizontal
Liquidation
KuangChiu Huang

14. Comprehensive Strategy-Formulation Framework
Stage 1: The Input Stage
Stage 2: The Matching Stage
Stage 3: The Decision Stage
KuangChiu Huang

15. Strategy-Formulation Analytical Framework
Input stage
External Factor
Evaluation
(EFE)
Internal Factor
Evaluation
(IFE)
Competitive Profile
Matrix
(CPM)
Matching stage
SWOT
BCG
IEM
SPACE
GRAND
Decision stage
Quantitative Strategic
Planning Matrix
(QSPM)
KuangChiu Huang

16. Strategic Figures Market share for its main services
Growth ratios in market share
Churn rates
ARPU
KuangChiu Huang

17. Financial Figures Liquidity ratio: Leverage ratio: Activity ratio:
Profitability ratio:
Growth ratio:
KuangChiu Huang

18. Liquidity Ratio Current ratio: Quick ratio:
Current Assets/Current Liabilities
Quick ratio:
Current assets minus inventory / Current liabilities
KuangChiu Huang

19. 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
KuangChiu Huang

20. 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)
KuangChiu Huang

21. 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
KuangChiu Huang

22. 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
KuangChiu Huang

23. 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
KuangChiu Huang

24. Thank You! My contact information: Office: R62509 Telephone number:
KuangChiu Huang