One of the most celebrated management tools is the
SWOT analysis. SWOT stands for
Strengths, Weaknesses, Opportunities, and Threats. This business tool is
utilized to analyze the internal (or the microenvironment) and the external (or
the macroenvironment) factors affecting a business or an industry. It is used to gauge the sustainable niche of a business
or an industry. After the analysis of the SWOT, TOWS matrix is being done. TOWS
matrix combines the S-O (Strengths and Opportunities), S-T (Strengths and
Threats), W-O (Weaknesses and Opportunities) and W-T (Weaknesses and Threats)
to come up with strategic alternatives. The
result of the SWOT and TOWS analyses provides a framework of strategic
alternatives where the firm or the industry can continue exploiting the
identified strengths and find strategies to avoid and/or eliminate weaknesses.
It also covers the exploitation of the opportunities of the firm or the
industry and put forth strategies to overcome and/or reduce the threats in the
external environment.
 |
| Figure 1. The TOWS Matrix |
I. Telecommunication
Companies in the Philippines: An Example
The telecommunications industry in the Philippines
particularly the mobile service market is dominated by two (2) major players, a
duopoly, namely SMART Communications
and GLOBE Telecom. It used to be a
3-player industry but in 2013, SMART Communications acquired Sun Cellular from
JG Summit.
II. Analysis of
the Internal Factors: Strengths and Weaknesses
Strengths and weaknesses are
internal factors affecting the business or industry. Strengths include those
tangible and intangible factors or resources that are distinct in the business
or industry. Weaknesses on one hand are those factors that prevent the
business or industry attain its full capacity.
Strengths
·
Widely Known Brand Names
The two players in the
telecommunication industry in the Philippines are all widely known names. Each
player caters different markets in the industry. Each plays the game in such a
way that they will be able to differentiate its product/service offerings to
competitors. It is no doubt that everyone knows the brand name of these
networks.
·
Cutting-edge fiber-optics technology
(e.g. 3G, 4G, LTE)
Because of advancement in technology
and the huge demand for new mobile services such as 3G, 4G, and LTE, the two
players in the telecommunication industry are offering these services to cater
the demand of their markets. People are fast-paced in having smart phones
because these new phones have the capacity to communicate intensively through
mobile Internet instead of the typical text messaging. The rising demand for
more advanced mobile phones requires advanced mobile service connectivity. According
to Bajarin (2013) the role of smart phones will become more dynamic.
·
High Growth Rate
The growth rate of the
telecommunication industry in the Philippines is considered high. Growth in the
Philippine enterprise telephony market is expected to outpace peers in
Asia-Pacific on the strength of the country's business process outsourcing
industry, according to research and consultancy firm Frost & Sullivan as
cited by Lowe (2012). According to the said research, the Philippine enterprise
telephony business grew by 7.2% in the second quarter 2012 and 24% in the first
half of the year to $8 million.
·
Huge Demand of Telecommunication
subscribers
The demand for telecommunication
products and services is considerably high in the Philippines. According to the
International Telecommunications Union (ITU), the United Nations specialized
agency for information and communication technologies, as cited in the online
article alliance.com.ph (2014), there were 87.3 million mobile subscribers in
the Philippines and 92% mobile penetration rate at the end of 2011.
Weaknesses
·
Poor Telecommunication
Infrastructure
The infrastructure needed by
telecommunication companies entails huge amount of investment. One of the sad
facts about telecommunication infrastructure in the Philippines is its slow
internet connection, a service also provided by the two players in the market.
The average webpage loading speed on desktops in the Philippines was 15.4
seconds, the second slowest behind 20.3 seconds of Indonesia in a Google study
based on the report of Bloomberg, an international news agency (Mendoza, 2012).
In a survey by OpenSignal, a company that created impartial coverage maps of
mobile networks, the Philippines was identified as the poorest and slowest LTE
(Long Term Evolution) broadband Internet access and coverage in the globe
(Luces, 2014). In 2013, the Philippines lagged behind Asian neighbors in
average Internet speed in according to the statistics of Akamai, a US-based
Internet content delivery network. The global average for Internet speed is 3.1
Mbps but the Filipino subscribers only experience 1.4Mbps, very far from the
international average (Hughes, 2013).
·
Late Adopter of New Technology
In 2012, 63% of telecommunication
companies across Asia had offered 4G mobile data services. This move proves
that mobile, Internet, and LTE are the most vital things in the telecommunication
industry in the continent. It is true that LTE adoption in developed nations
such as Japan and Korea is doing well but emerging markets including the
Philippines is at a slow pace. With approximately 34.6 million LTE subscribers
in Asia-Pacific region of the aggregate 3.45 billion subscribers in the region
in the first quarter of 2013, 4G is far from commonplace (Magdirila, 2013). The
LTE technology was commercially introduced in December 2009 by TeliaSonera in
Norway and Sweden and came to the U.S. market in 2010 (Pica, 2013). In the
Philippines, it was only in 2013 when LTE was introduced by SMART
Communications and Globe Telecom (Noda, 2013).
III.
Analysis of the External Factors: Opportunities and Threats
Opportunities are macroevironmental factors that
arise from several facets including the market itself, the economic and social
conditions, the political landscape, and even the technological
aspects. Threats on one hand refers to uncontrollable external factors
that can shake the stability of the business or industry.
Opportunities
·
New Technological Products Available
in the Market
The existence of new mobile phone
units such as smart phones and Iphones entails a huge opportunity for
telecommunication companies to offer services for users of these new mobile
phones. The advancements of mobile phones today require new services such as
3G, 4G, and LTE. These services can be provided by telecommunication companies.
In 2012, the Philippines was considered the fastest-growing market for smart
phones in Southeast Asia according to GfK, a research firm in Singapore. It
recorded a 326% increase in smart phone sales. The growth was relatively higher
that the 78% increase posted in Southeast Asia’s primary markets namely the
Philippines, Singapore, Malaysia, Thailand, Indonesia, Vietnam, and Cambodia
(Crisanto, 2012).
·
Value-Added Services
Aside from typical mobile service of
text messaging and phone calls, the growing number of smartphone and Iphone
users seeks for other advanced services such as 3G, 4G, and LTE. With this, the
telecommunication companies have the opportunity to provide these services.
·
Increasing Demand for Mobile Banking
The demand of consumers for mobile
banking services is also increasing this poses an opportunity for
telecommunication companies to offer this service. According to Juniper
Research, an international mobile telecommunication research company, over one
billion mobile subscribers will be using their mobile phones for banking by the
end of 2017. It was also predicted in 2013 that the mobile banking users will
register at 590 million (The Philippine Star, 2013).
Threats
· Regulation of the Telecommunication
Industry by National Telecommunication Commission (NTC)
In the Philippines, the government
through NTC regulates the telecommunication industry. The heavy regulation
imposed by NTC means a major threat for telecommunication companies.
·
Heightened Competition
The advent of digital wireless and a
multiple increase in the allocation of spectrum in mobile communication really
heightened the war in the telecommunications industry. It is evident that
technological advancement and competitive development provided an increasing
complex array of networks offering competing and complementary services. The
“war” between SMART Communications and GLOBE Telecom is becoming stiffer. In
2012, both players claimed to be number one in the postpaid segment – SMART
Communication by the number of subscribers while GLOBE Telecom by revenue per
subscriber in the first three months of 2012 (Viconti, 2012).
·
Availability of Substitutes
(Switching Costs)
In many cases, telecommunication
networks both provide inputs to, and compete with another network. This tends
the subscribers to switch from one network to another.
IV.
TOWS Matrix
The TOWS matrix, as shown in figure 2, summarizes the strategies that can be done by telecommunication companies in
the Philippines. This matrix shows the different strategies by combing the
strengths identified with the opportunities (S-O strategies), the weaknesses
and the opportunities (W-O strategies), the strengths and the threats (S-T
strategies), and the weaknesses and threats (W-T strategies).
 |
| Figure 2. TOWS Matrix for the Philippine Telecommunication Companies |
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