A CRITICAL EVALUATION OF THE STRATEGIC CHOICES OF TELKOM AND WHETHER THEY ARE APPROPRIATE OR NOT

According to Grant (2010:23) an organisation strategy can be identified or located in three places: in the heads of the chief executive and senior managers, in their articulation of strategy speeches and written documents and decisions through which strategy is enacted. From the Telkom view, the strategy statements can be identified in its vision, mission and values. These are as follows:

Vision To be Africas preferred ICT Solutions provider.

Mission To be a leading South African-based international ICT services group focused on long term sustainable profitability through growth in existing new markets.

Values y y y y y Continuous performance improvement Honesty Accountability Respect Teamwork

Strategic choice is the third logical element of the strategy formulation process. It therefore entails identifying options, evaluation of options and selecting a strategy. According to Boojihawon and Segal-Horn (2010) the process of strategic choice requires managers to identify several potential options, evaluate them and select the most appropriate for his or her organisation and context. Viney and Gleadle (2010:7) argue that in defining organisational objectives and implementation of selected strategy, comes the identification, evaluating and choice of strategic options, based on the analysis of external and internal data.

Therefore, in evaluating the strategic choice of Telkom, the discussion will firstly look at its strategic objectives/intent and secondly, evaluate its recent strategic decisions it has taken as a result of those objectives.

The aim of Telkom is to continue to strengthen their position as a communication champion across the African continent. This will be done through the following strategic intent:

To offer our customers enhanced bundled packages and tailored calling plans that will successfully grow annuity revenue;

To use our unique fixed-mobile capability as a platform for future growth. We intend to provide customers with array of ICT services, both voice and data, fixed and mobile. It should also enable us to leverage the strong relationships we have with our current corporate customers by extending the bouquet of services we offer to them;

To utilise the strength and reliability of our unique Next Generation Network and infrastructure to bring high quality broadband products to the market. These new and exciting content rich offerings are particularly applicable to digital home consumer markets such as gated communities; and

To become a Pan-African integrated service provider by making the Telkom brand synonymous with the best products and services on the continent

Strategic decisions or options that Telkom has taken as a result of its objectives will be highlighted below:

- Telkom has increased its global connectivity by entering into strategic memorandum of understanding with one of the largest telecommunications companies in the world, AT&T, which will connect Telkoms regional network with AT&T global network. In this regard Telkom has co-operated with AT&T for each partner to contribute something and moreover Telkom will benefit in terms of being connected to AT&T global network

- Telkom made its acquisition outside South Africa, namely, Africa Online, which is the largest Pan-African Internet Service provider in Sub-Saharan Africa - Telkom has pursuit a revenue growth opportunities outside the borders of South Africa. This was spearheaded by the acquisition in 2007 of Nigeria based Multi-Links. - Telkom also acquired 100% interest in MWEB Africa Limited. MWEB Africa is a group of companies offering internet services and its own VSAT access in Sub-Saharan Africa - Telkom is also investing in the Next Generation Network (NGN) to support converged services and the massive amounts of bandwidth that go with them - Telkom ADSL leads the broadband explosion with Telkom aiming to have achieved an ADSL penetration of 15% to 25% of total access lines. Demand is also being stimulated by the growing use of internet in the countrys education system and increasing expectation for learners to use internet as a research resource. The proven speed of Telkom service also drives growth in the ADSL subscriber base. - Telkom has rolled out 141 W-CDMA (Wideband Code Division Multiple Access) sites in major metropolitan areas throughout South Africa. This WCDMA allows Telkom to deploy fixed-line look-alike services with regional fixed numbering plans instead of deploying copper. - Telkom also moved into offering a fully fledged mobile service called 8.ta, which is a growth segment and mechanism against mobile cannibalism.

In the context of the strategic options outlined above, it could be said that Telkom strategy was to remain focused on pursuing growth into Afican markets, and reaching all its customers, new and existing with its new and existing communication services and products. We have seen a number of acquisitions by Telkom to enter into new markets and to partner/form alliances with other organisations such as MWEB, Africa Online and AT&T. This signaled a growth strategy by Telkom.

Telkom ventured into mobile business for growth and also due to the growing pressure from mobile operators to its international fixed-line communications.

From Porters generic strategies, it could be suggested that Telkom in its growth strategy or plan, favours a differentiations strategy According to Porter, there are three generic strategies that a company can undertake to attain competitive advantage: cost leadership, differentiation, and focus. Porter (1985) cited by Bakhru (2010:63) and Sidahmed (2006:9) argues that although organisations can have a myriad of strengths and weaknesses relative to competitors, they essentially compete in one of two ways: on the basis of cost or differentiation. Porters generic strategies are shown in figure 2.1.

Figure 2.1: Portes generic strategies

A company pursuing a differentiated strategy seeks to be unique in its industry along one or more dimensions that are valued by buyers. It selects attributes that buyers in an industry perceived as important and positions itself to meet those needs as fully as possible (Viney and Gleadle, 2010).

Is Telkom selected competitive strategy appropriate or not?

In responding to the above question, three sets of generic testing criteria by Johnson and Scholes (2003) cited by Viney and Gleadle (2010:52) will be used, namely, sustainability, feasibility and acceptability

Suitability

Telkoms proposed strategy is appropriate interms of it suitability since it matches or addresses its strategic objectived. For Telkon to grow , it needed to enter new markets which happened throught their differentiation strategy. Therefore, with its acquisition strategy of communication operators, it was able to penetrate new and existing markets.

Feasibility

In terms of whether the strategy is feasible, Telkom strategy might not be feasible due to their shrinking revenue & profits, but with its high quality and experienced staff, technology and physical resources, Telkom strategy might meet its objectives

Acceptability

The strategy might not be accepted consideration those acquisitions that ended up being sold to other providers due to the decline in revenue and its cost.