Unit 7.7 sample of Executive Summary

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Executive Summary

In response to the recent deregulation of the telecommunications industry in Hong Kong,

MegaTalk Telecommunications (H.K.) Limited (MegaTalk) has invited Professional

Consulting Associates Limited (PCA) to propose a business opportunity assessment study

which would assist it in positioning itself in the industry.

The purposes of this report are: (1) to identify critical success factors for MegaTalk based on its

strengths and weaknesses relative to its potential competitors; (2) to suggest optimal marketing

strategies for MegaTalk in the existing and emerging environment; and (3) to capture 20% of

the market share in the telecommunication industry in five years.

The report shows that there will be ample opportunities for investment due to the Government's

liberalization measures to encourage fair competition in the market. The release of the

International Simple Resale (ISR) license will involve an invitation for new firms to enter the

market. At the same time, many callback companies will reformulate their market strategies in

order to cope with the changing market environment. With the deregulation, price will be a

determining factor governing competition in the market. Also, as companies merge to better

utilize capacity, intense competition is also to be expected. Bargaining power of buyers will

increase accordingly, whereas that of suppliers will not be strong enough to drive the industry

competition. In respect of the threat of substitutes, the internet phone is still at the development

stage and therefore does not pose a great threat to the industry in the short run.

As a new entrant, MegaTalk can enjoy flexibility in responding to the external environment and

formulating competitive market strategies. However, in face of the cut-throat competition,

possible strong reactions from the existing competitors are to be expected. Optimal competitive

strategies would enable MegaTalk to find its market niche and to keep up with the competitors.

Based on market dynamics and potential, as well as MegaTalk's strengths and weaknesses,

PCA suggests that MegaTalk adopt a focused strategy on either one of three possible variations:

cost focus, differentiation focus, or cost and differentiation focus (where the cost and

differentiation are the optimal). PCA also recommends that MegaTalk target geographic

destinations as well as corporate buyer groups.