PLDT

UNIVERSITY

Republic of the Philippines

VISION

CAVITE STATE UNIVERSITY

The premier university in historic Cavite recognized for excellence in the development of globally competitive and morally upright i ndividuals. ndividuals.

(CvSU) Don Severino de las Alas Campus Indang, Cavite (046) 415-0010 / 415-0011 (046)4150012 Email Address: [email protected]

UNIVERSITY MISSION ³Cavite

State University shall provide excellent, equitable and relevant educational opportunities in the arts, science and technology through quality instruction and responsive research and development activities. It shall produce professional, skilled and morally upright individuals for global competitiveness.´

COLLEGE OF ECONOMICS MANAGEMENT AND DEVELOPMENT STUDIES

A course requirement in

STRATEGIC CORPORATE DEVELOPMENT

CASE STUDY About

MANG INASAL

Submitted to: MRS. NORMIDA HERNANDEZ

Submitted by: RIZALYN M. GLUA BSBM-BE III

MARCH 09, 2011

INTRODUCTION

PLDT is the leader in providing telecommunication services in the country. The company¶s business can be divided into three main business areas: fixed line, wireless, and information and communication technology. PLDT is the leading telecommunications service provider in the Philippines. Through its three principal business groups-wireless, fixed line, and information and communications technology-PLDT offers the largest and most diversified range of telecommunications services across The Philippines¶ most extensive fibber optic backbone and wireless, fixed line and satellite networks. PLDT is listed on the Philippines Stock Exchange (PSE: TEL) and its American Depositary Shares are listed on the New York Stock Exchange (NYSE:PHI) and the Pacific Exchange. PLDT has one of the largest market capitalizations among the Philippine listed companies. The fixed line business provides local calls, national and international long distance services, which operates around 2.1 million access lines. The wireless segment provides cellular, satellite, and VSAT services. PLDT provides cellular services through SMART, while Piltel is a reseller of SMART¶s digital GSM capacity under its own branding and pricing strategy for both voice and text messaging services. The information and communication technology provides solutions for internet applications and multimedia content delivery, with use of internet protocol-based solutions. The internet accesses are provided by Infocom ± a subsidiary of ePLDT. And other investees of  ePLDT provide e-commerce, call centers, and other IT-related services.

HISTORY

During the time of Spanish colonization of the Philippines, the Spaniards organized a telephone company that opened in 1890. PLDT was established on November 28, 1928, by an Act of the Philippine Legislature and approved by then-Governor-General Henry L. Stimson by means of a merger of four telephone companies under common US ownership. Known as Act 3436, the bill granted PLDT a 50-year charter and the right to establish a Philippine telephone network linking major points nationwide. However, PLDT had to meet a 40-day deadline to start implementing the network, which would be implemented over a period of one to four years. By the 1930s, PLDT had an expansive fixed-line network and for the first time linked the Philippines to the outside world via radio telephone services connecting the Philippines to the United States and other parts of the world. Telephone service in the Philippines was interrupted due to World War II. At the end of  the war, the Philippines' communications infrastructure was in ruin. U.S. military authorities eventually handed over the remains of the communications infrastructure to PLDT in 1947, and with the help of massive U.S. aid to the Philippines during the 1940s and 1950s, PLDT recovered so quickly that its telephone subscribers outpaced that of pre-war levels by 1953. On December 20, 1967, a group of Filipino entrepreneurs and businessmen led by Ramon Cojuangco took control of PLDT after buying its shares from the American telecommunications company GTE. The group took control of PLDT's management on January 1, 1968, with the election of Gregorio S. Licaros and Cojuangco as chairman and president of  PLDT respectively. A few months later, PLDT's main office inMakati City (known today as the Ramon Cojuangco Building) was opened, and PLDT's expansion programs begin, hoping to bring reliable telephone services to the rural areas.

PLDT was permitted to operate during Martial Law. During the 1970s, PLDT was nationalized by the government of then-President Ferdinand Marcos and in 1981, in furtherance of the then existing policy of the Philippine government to integrate the Philippine telecommunications industry, purchased substantially all of the assets and liabilities of Republic Telephone Company, becoming the country's telephone monopoly. However, after he was overthrown,

the

company

was

re-privatized.

By

1995,

with

the

passage

of

the

Telecommunications Act and the subsequent deregulation of the Philippine telecommunications industry, the company had been de-monopolized. In 1991, Smart Communications was incorporated, with its major shareholders at the time being certain Philippine companies and other affiliates of First Pacific (the parent company of PLDT), as well as NTT Communications Capital (UK) Limited. Both groups owned around 96.7% of the new company. On March 24, 2000, PLDT completed its share-swap acquisition of Smart, making Smart a 100%-owned PLDT subsidiary. On November 29, 2008 celebrate 80 years and the slogan is We're Changing Lives live on Eat Bulaga at GMA Network in Saturday. On March 2, 2010, PLDT announced that its subsidiary, Media Quest Inc., has acquired 100 percent of Associated Broadcasting Company (TV5) and Primedia Inc. Manuel V. Pangilinan, Chairman | Napoleon L. Nazareno, President and CEO | Dan Ibarra, PLDT Retail Business Group Head

BOARD

OF DIRECTORS

PLDT will be the preferred full service provider of voice, video and data at the most attractive levels of price, service quality, content and coverage, thereby bringing maximum benefit to the Company's stakeholders.

Manuel V. Pangilinan , Chairman of the Board

Napoleon L. Nazareno , President and CEO

Helen Y. Dee

Ray C. Espinosa

Tatsu Kono

Bienvenido

F. Nebres, SJ (Independent Director)

Takashi Ooi

Oscar S. Reyes

Albert F. Del Rosario

Pedro E. Roxas (Independent Director)

Juan B. Santos1

Tony Tan Caktiong

Alfred V. Ty (Independent Director)

SUBSIDIARIES AND AFFILIATES

The following are PLDT's wholly-owned subsidiaries and affiliates (as indicated), divided according to its self-defined categories: Wireless:

y

Telesat Philippines

y

Smart Communications

y

Smart Broadband

y

Smart Connect Holdings (Singapore)

y

Smart Connect Global (Singapore)

y

3rd Brand (Singapore, 85%-owned affiliate)

y

I-Contacts Corporation

y

Wolfpac Mobile

y

Wireless Card

y

Smarthub

y

Ph Communications Holdings

y

Francom Holdings

y

CURE d/b/a Red Mobile

y

Pilipino Telephone Corporation (99.5%-owned subsidiary via Smart Communications)

y

ACeS Philippines

y

Mabuhay Satellite (67%-owned affiliate)

Fixed-Line:

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PLDT Clark Telecom

y

PLDT Subic Telecom

y

Smart-NTT Multimedia

y

PLDT Global

y

PLDT US

y

PLDT US Retail

y

PLDT UK

y

PLDT HK

y

PLDT HK 1528

y

LDT HK Ltd

y

PLDT SG

y

PLDT SG Retail Services

y

PLDT-Maratel (97.8%-owned affiliate)

y

Bonifacio Communications Corporation (75%-owned affiliate)

y

PLDT-PhilCom Corporation (100%-owned affiliate)

Information and Communications Technology:

y

ePLDT

y

ePLDT Ventus

y

Vocativ Systems

y

Parlance Systems

y

SPi Technologies

y

Infocom Technologies (99.6%-owned affiliate)

y

iPlus Intelligent Network, Inc.

y

Digital Paradise Thailand (87.5%-owned affiliate in Thailand)

y

netGames (80%-owned affiliate)

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Digital Paradise (75%-owned affiliate)

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Level Up! (60%-owned affiliate)

Broadcasting:

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MediaQuest Holdings, Inc.

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Associated Broadcasting Company

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Primedia Inc.

y

Nation Broadcasting Corporation

y

GV Broadcasting Systems/ Media Scape (50%-owned affiliate)

y

Cignal Digital TV

y

Business World (30%-owned affiliate)

Wireless

PLDT reported that as of December 31, 2009, its mobile phone subscriber base reached 41,328,641 users, combining subscribers using Smart, Talk 'N Text, and Red Mobile.

MISSION STATEMENT

PLDT will be the preferred full service provider of voice, video and data at the most attractive levels of price, service quality, content and coverage, thereby bringing maximum benefit to the Company's stakeholders.

VISION STATEMENT

PLDT is an employer of choice. A high performing organization, a great place to work in, attracting and retaining the best talents in the marketplace, best in class and proud of its heritage.

MATRIX OF MISSION AND VISION OF PLDT AND COMPETITORS COMPANY NAME

PLDT

DIGITEL

GLOBE

MISSION

VISION

PLDT will be the PLDT is an employer of  preferred full service provider  choice. A high performing of voice, video and data at the organization, a great place to most attractive levels of price, work in, attracting and service quality, content and retaining the best talents in coverage, thereby bringing the marketplace, best in class maximum benefit to the and proud of its heritage. Company's stakeholders. Committed to nation building and countryside development, we provide reliable communication access through seamless connectivity linking the Filipinos to each other and to the rest of the world. We put our Customers first. Our people make the difference. We act with integrity. We care like an owner. We keep things simple. To us, it's be fast or be last.

To be the most preferred full service telecommunications provider in the country.

Making great things possible.

I love Globe. Together, we make great things possible.

Suggestion for PLDT Mission:

The mission of PLDT is short but complete that the readers can easily understand what the company vision is. It is also interested to read for the reason that it is short so. Suggestion for PLDT Vision:

The PLDT vision is very interesting. It is also good that PLDT make their vision broad.

FUNCTIONAL AREAS OF PLDT Management

The company is the largest and most diversified telecommunication company in the Phil. The company has managed the business onto 3 main segments, wireless, fixed line and information and communication technology. Wireless telecommunications, service provided by Smart Communications, Inc and Pilipino Telephone Corporation. Fixed line Telecommunications service primarily provided trough PLDT. Information and communications infrastructure and services for internet applications. Marketing

The company¶s goal is to reach out to their consumers and all possible market. They want to reach out to satisfy their needs. The company hires all the right staff for this kind of job. Finance / Accounting

On a consolidated basis, PLDT used net cash of Php41, 557 million for financing activities in 2006, compared to Php27, 937 million in 2005 and Php30, 827 million in 2004. The net cash used in financing activities in 2005, 2004 and 2003 was mainly attributable to interest payments and debt repayments by PLDT in line with its ongoing debt reduction program. Production / Operations

PLDT consolidated net cash flows from operating activities in 2006 increased by Php17, 542 million, or 31%, to Php73, 514 million from Php55, 972 million in 2007 and by Php1, 334 million, or 2%, from Php54, 638 million in 2008. A growing portion of our consolidated cash flows is generated by our wireless business, which accounted for 61% of our consolidated revenues and other income in 2006, compared to

57% in 2005 and 51% in 2004. Revenues from our fixed line and information and communications technology services accounted for 37% and 2%, respectively, of our  consolidated revenues and other income in 2006, compared to 41% and 2%, respectively, in 2005 and 48% and 1%, respectively, in 2004. Wireless¶ cash flows from operating activities accounted for 57% of our consolidated cash flows from operations owing to the sustained growth of our cellular subscriber base and service usage. Our fixed line business contributed 41% to our consolidated cash flows from operations in 2006 with improved collection efficiency and lower cash expenses in line with our  cost-containment efforts. We believe that our continuing strong cash flows on a consolidated basis will allow us to defray our current liabilities despite our current ratio being less than 1:1 as at December 31, 2006. Research and Development

Philippine Long Distance Telephone Co. has recently forged new partnerships with leading software and computer hardware companies to expand its innovation laboratory and churn out new innovative solutions for clients and thereby uplifts information and communications technology (ICT) capability in the country. Intel, Microsoft, ProSoft, GIS, JIMAC, IBM Avaya, Veritas and Microdata teamed up with PLDT in the expansion of the PLDT InnoLab, where research and development on telecommunications technologies, training, applications testing and live product demonstrations can be conducted. The expansion involved converting the whole PLDT TelTEC Building on Boni Street in Mandaluyong City into the PLDT InnoLab Building, where PLDT InnoLab used to occupy only a mere 116-square-meter area. The new partners for PLDT InnoLab provided the applications and some of the equipment for demonstration, training, and research and development activities with

government, academe and PLDT clients. PLDT also added new laboratory and training rooms as well as additional solutions showrooms. Management Information System

Management Information System (MIS) receives information from both the external and internal evaluation of an organization. It gathers data about marketing, finance, production and personnel matters internally, and social, cultural, demographic, environmental, economic, political, governmental legal, technological and compet itive factors externally.

EXTERNAL ASSESMENT Analysis of PLDT Company Using Porter¶s Five Forces: Threats of New Entrants

The entry of new competitors poses a low threat in the industry. The business requires a huge capital outlay to engage to it. It is not that easy to invest in a business like this. Rivalry among Competitors

Rivalry among Competitors is medium. Rivalry among competitors in this industry is not that intense. It is not that intense because it is really hard to dominate in this kind of industry without the proper strategies being used. Threat of Substitute

Threat of substitute is medium. Even though cell phones are already such a click as a substitute, most telecommunication company also offers wireless telecommunication services.

Bargaining

Power of Suppliers

Bargaining Power of Suppliers is low. The business does not need any suppliers. The business must have a large network and the most updated technology to cope up with the fast changing pace of telecommunication. Bargaining

Power of  Buyers

Bargaining Power of Buyers is low. Consumers cannot bargain. The consumers can only go straight to the company to avail the service that they want.

INTERNAL ASSESMENT SWOT ANALYSIS

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STRENGTHS

Owns top position ± PLDT owns the top position in the Philippines for the telecoms industry. They initially provided fixed line to the Philippine market during the early times, and have now extended their market for wireless technology. By acquiring SMART as their wireless partner, they became the number 1 provider for wireless phones. As technology continued to boom, then came the internet, which started as dial-up connection and eventually produced the broadband connection, widely known as the DSL. Then came ePLDT, which stood as the technology arm of PLDT. ePLDT gave the answer to internet problems and also took the top position.

Majority of Philippine market share ± Having a wide range of products, from fixed line, wireless line, and internet connection, PLDT was able to capture majority of the Philippines market. PLDT holds the Philippine market for fixed line. By taking a gamble of getting SMART during the time when the GSM (Global Service for Mobile Communications) service and cellular market

growth was still uncertain, they now earned the market for wireless lines, used of mobile phones, which accounts for 52% of PLDT Group¶s revenues. As technology was taking over the public¶s attention, PLDT also caught the market in broadband and narrowband internet. They launched the product Vibe for dial-up connections, and DSL for broadband connections.

Industry specialists ± With the long history and very vast knowledge in the industry, PLDT has invested on their people. As technology becomes more sophisticated, the company provided trainings to their employees to keep them up to date with the latest technologies and be at par  or better than their competitors. PLDT provides training with a trainer and by use of online materials.

National and global coverage ± After successfully capturing majority of the market in the Philippines, PLDT decided to go global by expanding their market in Hong Kong. They launched the 1528 Smart to cater for the Filipino people in Hong Kong. This was a partnership of Hong Kong CSL Ltd and PLDT (HK) Ltd. It allows the Filipinos in Hong Kong to access Smart mobile services and content, which includes Smart Money, Smart Load, Smart Pasaload, and Smart Padala ± the world¶s first text-based remittance service. This also provides a cheaper rate for  OFWs when they make long distance calls or send text messages to the Philippines. The cost is much cheaper by as much as 50% as compared to using foreign networks.

Creative marketing strategies ± PLDTs marketing proved to be one of the best by continuously coming out with new ideas to capture the Philippine market. Aside from the products that they already sell to customers, they think of ways on how they can satisfy the needs of the people by providing more reasonable and affordable rates and give chance to the less fortunate to experience the new technologies available in the market.

Conquering the mass market ± Most of the population in the Philippines represents the masses, so PLDT thought of ways to capture the mass market. With a wide range of products they can offer, they transformed them into smaller forms to make it more affordable to the majority of the public. For the fixed line, they came out with the ³Telesulit´, which offered a prepaid version of  the fixed line. This enabled PLDT to retain their customers who cannot afford the normal fixed line, and resulted to 33% more fixed line users from a year ago. For the Vibe, the dial-up internet connection service, they also offered a prepaid version, by allowing customers to purchase scratch card that contained the connection details, which only amounted to 100 and allows the customer to use 20 hours of internet. If we calculate it in a per minute basis, it only costs 8 cents per minute. Aside from the prepaid internet offered for the Vibe, it also has what they call the pay-per-surf. Using this kind of package, the customers will only pay for the minutes they use. For the wireless services, SMART introduced the Smart Load, which enabled the prepaid customers to make a reload for as low as 30 pesos.

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WEAKNESSES

Customer service ± When PLDT launched its Vibe and DSL products, which allowed customers to have a faster connection to the internet using broadband, there were a lot of complains regarding the service provided. Much of the complaints were because of the slow connection which didn¶t meet the customer¶s expectations. And that complaints made or reported were not attended at a reasonable time. This kind of situations may cause customers to decide and change their providers, who they believe are much better in providing the service needed.

Foreign Investments ± PLDT is very much exposed to the risk of peso weakness because 98% of its US$2.5 billion is denominated in foreign currency. Around half of the company¶s total debt are covered by the US Dollar, which is equivalent to around USD$351 million. The risk of the depreciation of peso is mitigated by the linkage of about 40% of PLDT¶s revenues to US dollar.

Since about 18% of PLDT¶s US dollar linked revenues are from the monthly charges payable by the postpaid fixed line customers, these monthly charges may increase if the peso depreciates.

y

OPPORTUNITIES

Venture for new technologies ± Ideas of introducing a new technology to the market is a good move, especially if the product is very attracting to the public. People are very much interested for new products that are launched in the market, and how it can add do the current technology they are using. Being the very first to release a new technology will have a good chance of  capturing the market sales, therefore increasing in customers and revenue. An example for this is the text messaging for mobile phones.

Dropping prices of PC and laptops ± As more and more people are turning into the computer  business, it is predicted for prices of PCs and laptops to go down to affordable prices, as other  computer manufacturing companies are trying to offer lower cost for these equipments. The more affordable these electronic equipments go, the more people will be willing to purchase one. And as more computers are sold, there will be a bigger demand for broadband service.

Partnership with other establishments ± With the internet becoming part of the everyday life nowadays, people are looking for ways to connect to the worldwide web wherever they go ± restaurants, hotels, shopping malls, resorts, and other public places. Having a broadband socket or hotspot in place may attract more people in choosing this certain area other than their  competitors. This may result for the establishment to gain more customers and at the same time, generate more revenues.

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THREATS

Fixed line market drop ± There are predictions that the fixed line market will drop as the future nears. With new communication technologies coming out at a very fast rate, the public are now considering of using those new technologies that offer more comfort and convenience. Even for  PLDT, who holds the market for fixed line, may be affected of this drop in sales.

Industry competitors ± Presently, there are already different competitors providing the same services as PLDT and SMART have, not to mention other competitors that may still enter the playing field. If one of those competitors will be able to introduce a new product that may interest the public, then there¶s a chance that customers will consider having a deal with those competitors.

SUMMARY

Philippine Long Distance Telephone Company provides telecommunication products and services in the Philippines. The company¶s Wireless segment provides cellular mobile services; customer interaction solutions; mobile applications development services; mobile commerce solutions marketing services; mobile commerce platforms; and software development and sale, maintenance, and support services; solutions and systems integration services; satellite communications services; and satellite information and messaging services. This segment also delivers global system for mobile communication (GSM) capability for  the maritime sector, promotes the sale and/or patronage of debit and/or charge cards, and trades in satellites and GSM enabled global telecommunication markets, as well as engages in Internet broadband distribution business. Its Fixed Line segment offers fixed line

telecommunication services, such as local exchange, international long distance, national long distance, and data and other network, as well as infrastructure and related services. The company¶s Information and Communications Technology segment offers broadbased

integrated

information

and

communications

technology

services

focusing

on

infrastructure and solutions for Internet applications, IP-based solutions, and multimedia content delivery. This segment also provides knowledge processing and customer interaction solutions, as well as operates Internet data center under the Vitro brand name; and offers Internet and online gaming services. As of December 31, 2009, Philippine Long Distance Telephone Company served 41 million subscribers. It also resells software licenses, server solutions, networking products, storage products, and data security products.

RECOMMENDATION

The products of PLDT, like the DSL/broadband internet, can installed in the location of  its partners, like hotels, resorts, restaurants, shopping malls, and other places where most of the people usually go. The broadband internet is quickly becoming one of the necessities, especially for working people. People who are not yet familiar with PLDT broadband will be introduced to the product. And if the public experiences the fast connection, they may also consider having that at their  home. Or change their existing ones to PLDT. As their product gets known to the people, PLDT will also earn from what is being charged from the customers for the use of broadband.

CONCLUSION

If the establishment doesn¶t give a good impression to the public, then there will be lesser opportunities for the installed broadband to be exposed to the people. PLDT needs to cash out some money to install the devices in those establishments and make sure that everything is well maintained and secured. Market for other establishments with existing agreements with other competitors may no longer be available

REFERENCES: y

PLDT WBESITE

y

Wikipedia

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Yahoo.com

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Google.com

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http://www.usnewslasvegas.com/business/pldt-group-to-develop-a-technology-tomonitor-power-consumption/

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http://www.manilatimes.net/business/pldt-warns-of-slowdown-until-2012/

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http://www.thepoc.net/thepoc-features/mukhang-pera/mukhang-pera-news/1686-thebattle-of-business-empires-rages.html

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http://www.manilastandardtoday.com/2009/june/5/business5.htm