Finance

Case Summary

Recently, telecomunication –sellular- has become an important aspect in our daily life. In business point of view, it has entering new stage of competition, especially in communication line. All parties –from starter player until the senior one- must give their best to win this competition. They try to press the tariff as low as possible, so that the customers would be attracted and use their services. The competition has turned into such kind of “tariff war” and also “ads war”. The competition atmosphere has bigger portion than education or added value to the customers. When the company A launch a new communication theme, then soon, its competitors strike with other themes. And it is not over yet, the company A will reply by strike back with more interesting theme than theme that has launched by its competitors before. This phenomenon happened over and over.

The strategy in the sellular industry is focusing in the communication aspect. There is a kind of war marketing. This industry has run more than ten years, so the basic strategies in marketing, which are product and distribution, cannot be reliable anymore. The reason is, all company have the same product and distribution. So that only promotion and price which could be the competition instrument.

Coverage and network quality has already out of date, because almost all (except the new one) operators have the same class in providing those aspects. In the beginning, the competition focused in coverage development. Then, when all operators have the same coverage, the next acquisition focus is tariff. And if the tariff competition has reach the exhausted level, the focus will be the quality, then value added service. That is what happen in the world, but in Indonesia tariff is the main strategy.

The tariff in sellular industry has reach the cheaper level than was in the first time this industry operated. Eventhough all the tariff are aplicated under certain circumstances, still, the tariff war make the industry “bleeding”. Because the condition make the margin getting smaller. But it does not matter as long as the total profit is large enough. The total profit could be bigger if the volume of user (customers) is increasing significantly.

Sellular tariff in Indonesia is more expensive rather than in other countries. So, the operators should press the tariff bersamaan dg peningkatan service quality in order to attract (acquire) new calon customers. Moreover, the transparation is also the important factor that operators must consider.

Main Issue

1. There is pride and prestise fight in sellular industry in Indonesia. And all operators –from the new comers until the leader one- must compete to win the fight.

2. The competition atmosphere has bigger portion than education or added value to the customers. This make the customers in