Week
17
1) Can
you think of an organization that has implemented a high risk strategy that has
resulted in success (why was it high risk at the time and why it was a success
– was it a success – was it good luck or good judgment.)
2) Now
do the same for an organization who embarked on a high risk strategy that
resulted in some sort of failure (why was it high risk and why did it fail –
bad luck or poor judgment)
Answers
1) Organization
that has implemented a high risk strategy that lead to the success is Ncell
Private Ltd. Ncell is a privately owned GSM operator in Nepal. It is the first private company to operate
GSM services telecommunication sector of Nepal.
I think the company has implemented high risk
strategy because the Nepal telecommunication which is currently big competitive
rival of Ncell used to be a monopoly player in telecommunications and it was
hard to change the customers mind to attract for the newly established company
like Ncell. In the early stage of the establishment the Ncell used to be named
as Mero Mobile. At the period the company was not doing well, they were unable
to attract the public. In 12 March, 2010 the company was re- branded as Ncell
and is now owned in 80% by Swedish/Finnish TeliaSonera Holdings. Now, the
company had seven million mobile subscribers and also the company operating all
75 districts in the country.
I think company has well implemented the high
risk strategy at the period it was rebranded as Ncell. Being a new owner in a
new environment it is always tough to operate and TeliSonera Holdings did it
pretty strategically. The first task of the company was to change the mind
perspective of Nepalese customers. They try to do that by renovating the
strategy. First they reduce the cost of outgoing calls and also reduce the cost
of their GSM prepaid and post-paid Sims. This strategy also helps them to enter
in the market and also provide the noticeable advertisement towards the
customers. Now the company is gradually expanding its network coverage in
various urban, semi urban and rural areas of the country. Ncell has also been
providing services to the subscribers by installing and using satellite
equipments and network.
I think Ncell
being a number one telecommunication industry in Nepal currently it is the success
more than luck. The company changes the face of telecommunications industry in
the country.
2)
Every organization
encounters risk every day as they pursue their objectives. Some cope with it
very well and some stay behind. There are many companies which have failed
because of their high risk strategy. One of the companies is Kingfisher
Airlines Limited. Kingfisher Airline Ltd. was an airline group based in India.
The airlines commenced its operation 2005 and it has a 50% of stake on low-cost
carrier Kingfisher red. On the beginning of operations the company was doing
very well. They were operating 250 daily flights with regional and long haul
international services. This airline was one of the seven airlines awarded 5
stars rating by Skytrax and also won Skytrax award for India`s best airline of
the year 2011.
On October 20, 2012 the airline had to shut down
its operations as DCGA suspended the flying license. The major reasons for the downfall of airlines
are:
1)
No network
Planning : Kingfisher tried to copy the network of arch rivals of jet airways “
A me too approach” shifting its
operations base from Bangalore where it was sole Indian carrier to the Mumbai,
the base of the both jet Airways and Air
India, this strategy increases intense competition, economic downturn and
inability to hike due to competition.
2)
In the early of November 2011 the company
could not pay its pilots, stewardess, janitors and its staffs. The debt was
increasing, with total debt of Rs. 7000 cr.
and airlines made an operational loss of Rs. 1027 cr. over the last year
operation. The debt was increasing and the airline unable to make a daily
routine flight due to suspension makes the environment much worse.
3)
In 2007, Kingfisher Airlines acquired
Air Deccan which was a low cost airline. For an airline to fly internationally
it requires five years of operations. For this reason, Air Deccan was acquired
by Kingfisher Airlines and entered into cheaper market segment. It was a high
risk strategy, because Kingfisher Airlines was launched as a premium business
class airline. Launching as a premium business class airline was a high risk
for Kingfisher Airlines.
The reason behind the failure of Kingfisher
airline was poorer judgment than the bad luck. The company unable to identify
the customers and making random poor decisions led to the failure of Airlines
References
·
Online available from http://businesstoday.intoday.in/story/vijaymallya-shuts-down-kingfisher-re/1/19258.htm/.
[Accessed
April 6, 2013]
No comments:
Post a Comment