The Upstart's Assault Facts:Meridicom, the largest and the oldest telecommunication company in the country operating in mobile,

landline and broadband services, was the industry price leader. It faces an upstart mobile network operator Telzip, with 25% market share in mobile, trying to make seek entry into its turf thru aggressive campaign for its broadband and landline services. The campaign by Telzip made Meridicom ponder over the matter to strategize for future. Looked from Meridicoms perspective, number wise situation presently looked as under:

Figure 1 .Present Market Share in Mobile communications

Landline No.1 in the market, contributes 70% to the topline of company

5 10 Percentage Market Share Meridicom Percentage Market Share Telzip Percentage Market Share Others

85

Figure 2 Present Market share in Landline Communication

Broadband Contributes 25% to the topline of company. Fastest Growing segment of the company. It is having highest margin.
40 60 Meridicom Telzip Others 0

Figure 3 Present Market Share in Broadband

Key issues at hand:1. 2. 3. 4. Whether to respond to Telzips aggressive campaign? If yes, then in what form? What would be the short term strategy? What would be the long term strategy?

Whether to respond to Telzips aggressive campaign? In our view, Meridicom needs to respond to the situation. Competitive heat may not scorch immediately because the promise of free for life broadband service from Telzip may not look credible. However, if other players chose to board the free for life ship, it will have to take drastic measures hastily and that too on Telzips terms. The charts above depict that broadband services contribute 25% to its topline, is fastest growing segment with highest margin. Being inactive or slow in this domain can prove to be dangerous for future. Through broadband Telzip is challenging Meridicoms most established landline business in a bundled attack. By offering free broadband to other company consumers switching over to Telzip, they threatened Meridicom, having 85% market share, directly and hence must be answered back. Apart from losing landline revenue, Meridicom was to lose connection between the local exchange and consumers home or office. It would deprive them of a powerful tool to gather data about customers ,which helped them devise and offer attractive telecom services in future. So owning the "last mile" in the network was a key consideration for maintaining the leadership position here.

If yes, then in what form? In his 1980 classic Competitive Strategy: Techniques for Analyzing Industries and Competitors, Porter outlined basic strategies as cost leadership, differentiation, and market segmentation. Market segmentation is narrow in scope while both cost leadership and differentiation are relatively broad in market scope. The case suggests that Meridicom is in a positive price leadership position. Being one of the best-known brands in the country, customers, especially business customers, trust and know their quality. Thus, apparently it follows differentiation strategy broadly. Therefore,, it wont be sensible to abandon its parent turf ,and switch over to the radically opposite new cost leadership turf,thus conceding strategic psychological defeat. Current strategy for an upstart is going to cost Telzip dearly if it fails to generate the numbers. It may wind up the venture altogether, if it failed to absorb its initial losses .Telzips current strategy is a kind of attention seeking gamble in a market dominated by Meridicom and reminds us of the business strategy followed by RCOM in India. It started with the attractive and cheap plans (Monsoon Hungama scheme 2003) for subscribers in 2004, but became the first company to increase its call rates by 25% on 21st September 2012. Therefore, there are three basic lines of action desired from Meridicom:1. It needs to protect its market share 2. It needs redesign its business model & offerings to make it more customer friendly 3. It needs to take the battle to Telzips mobile business domain, where it hurts them the most. After weakening Telzip considerably here by making an aggressive, value enriched, & perceivably better proposition here, and prolonging the battle in other domains, it may think of buying out Telzip in the long run. After all, its having a 25% market share compared to a weak 5% of Meridicom in mobile.

What would be the short term strategy? Meridicom launches an attractive and aggressive scheme to reward loyalty of existing subscribers Educates the market thru media campaigns about how a free broadband service bundled with billable landline service is not a free service after all It highlights its brand, reliability, technical competence and reach to inspire confidence among the consumers about its service capabilities In its campaigns for its consumers, it must harp on need of service dependability and quality in telecommunication business. A small temptation for cheaper service can cost dearly in business term It launches a very lucrative scheme in mobile telephony even at the cost of losing some revenue at present.it wont lose much as it hardly have 5% market share at present. And

the Telzip storm is hardly going to last a couple of months. Moreover, it will get Telzip busy defending its present core business.

What would be the long term strategy? Meridicom must do all it requires to do, in order to exceptionally enhance the customer experience with its services. It entails consolidation of business by bringing all the three services under one umbrella Designing offers for customers in bundled fashion, cross incentivizing present consumers opting for some other services and new consumers opting for more than one service at a time Taking advantage of its long experience in the market and deeper pockets, it must bring in a paradigm positive transformation in its services and offerings without enhancing the price The company must be approachable to its consumers thru a single window and the approach in meeting their aspirations must be proactive It must employ very effective CRM initiative to build upon its customer loyalty and enhance the emotional connect with them It must transcend the current level of competition by positioning itself as a differentiated telecommunication business solution provider It can explore the option of seeking to take over Telzip at a later stage, when it has weakened it considerably by its swift and effective marketing maneuvers. But it has to read with caution to amalgamate a company with radically opposite business strategy lest it goes Kingfisher Airlines way