Strategic Crossroads at Matav: Hungary’s Telecom Powerhouse Assignment 1 What is Matav’s Strategy? Has it been successful? Matav, being the Hungarian Telecommunications Powerhouse, had secured their foothold in most of the communications market in Hungary, including business services, residential services, Internet and Mobile. Their parent company Deutsche Telekom wanted them to remain an integrated telecommunications company.
Since their objectives were laid out in front of them, they were facing a stagnant fixed mobile market in Hungary with the only scope of expansion being the broadband market. So their primary focus was on competitive response to the core customer base, consolidating financial performance, increasing productivity and expanding the broadband market. The next step that Matav took in implementing their strategy was to split their vast company into smaller business units which could manage their market independently and sufficiently.
International expansion was on the cards as well. Belonging to a greater European powerhouse, they had all the man power and resources to help them step in to a new, less visited, European country where the telecommunications prospects were bright. I personally think that there was no other option but to expand their foothold in the rest of Europe and keep the domestic growth ascending with introduction of new technologies. The fixed line business was decreasing as it is and the competition had reached a saturation point.
The strategy hasn’t been as successful as late since, the domestic competition has increased, Matav are losing foothold in the fixed and mobile market, contrary to the fact that they still are the number one Telecomm Company in Hungary. Does Matav have any competitive advantages in its domestic markets? Matav, off late, has faced a lot of domestic competition because the East European Market has seen a heavy increase in the small telecommunications companies’ bracket. These small companies enter the existing markets and offer low price incentives which inevitably increases competition in the price war.
Matav is a telecommunications powerhouse. It has the infrastructure, the ability, the foresight and the manpower to match any competition the foreign companies can offer. Matav is a well-established integrated communications company and has footholds in all the four markets of residential, business, internet and mobile. They already have a lot of customer market in the Hungarian environment. Familiarity with the local policies, business and customers makes Matav even more powerful when it comes to dealing with competition.
It could add additional services by implementing new technologies on the current infrastructure to the current customer base and could also attract a lot of customers by giving bundled service like fixed and mobile or fixed and internet together. Do Matav’s international expansion plans make sense? Why? Matav was taken over by a European Telecommunications giant. The line was clear. Since the domestic market was completely overwhelmed by Matav, the only logical place to expand further was another European company. Matav is already an integrated telecommunications powerhouse.
There is no new market it can create or develop within its own country to sustain development for it. There has to be competition and scope for expansion by introducing new technology into third world countries. This is very attractive when offered at a lower price than your local provider. Matav’s international plans make sense to me for precisely the same reason. There is scope for expansion and revenue in untapped markets more than expansion in tapped markets. Nevertheless, the domestic market should not be overlooked since that’s the main source of revenue and development for Matav.
Matav was also losing foothold in themobile market. It needed to expand and look for new markets. This exhibit will show you why. If you were a member of the strategy group, what would you recommend to Andras Balogh? If I was a member of the Andras Balogh team, I would recommend continuing what the company was doing. On top of that, I would ask him to fix his gaze more upon the local market since lately, the competition was increasing drastically. Even if the international expansion makes sense, the company should not lose its foothold in the domestic market.
Since the infrastructure and the man power already existed, new technologies should be researched and implemented since, if someone else comes up with it, we don’t want to fall behind the market. A new research division should be created which could work in collaboration with the german giants to implement and try new technologies. This team should constantly be in process of innovating and researching new technologies. They should also keep a watch on the new emerging technologies in the markets across the world.
Another division should constantly keep check on the local market and try and implement and provide the existing customer base enough to hold on to Matav for the next generation of technologies. This division should constantly help provide information to both the research divisions and the international division about the needs and demands of the local market and what to expect. The international division should concentrate solely on expansion and should set up local divisions to help understand the local market. It should also make sure all the international markets communicate with each other.
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