Target Country Selection Strategies For Translational Operation Of Telecom Operators

Location choice is a primary decision-making problem for enterprises to make foreign direct investment and it is also a key issue facing Chinese telecom operators at their initial stage of implementing the "Going Global" strategy. Whether a target country is well selected or not is directly related to the success or failure of transnational operations of telecom operators. Telecom operators are highly affected by regulation policies. Due to the difference in market entry policies among countries, whether the operators can enter into the market or not and their possible market positions are of great uncertainty. As the global mobile communications market gradually becomes saturated, this limited market entry opportunities become even more competitive. Thus, the existing market selection methods are unable to meet the needs of decision-makers. Successful market entry requires the operators to look into the problem from the strategic perspective. In order to provide a simple and cost-effective method for China’s telecom operators, a Target Country Selection (TCS) model is proposed in this dissertation. It is based on the earlier research in the areas of competitive advantage and FDI location theory together with telecom operators’special characteristics in transnational operations. Case studies and large sample statistical empirical research are used to find the relative influencing factors to lay the foundation of indicators for TCS model. China Mobile is selected as an example to apply the model and the suggestions regarding translational operations of the company is given afterwards.The main contributions of this dissertation are as follows:1. Twenty most internationalized telecom operators are ranked worldwide and their market positions in152countries are illustrated in statistics to analyze the applicability of traditional internationalization theories on telecom operators. Analysis shows that telecom operators chose target countries gradually according to the different regulatory reform timeframe of privatization and liberalization of various countries rather than just starting from neighboring countries. Emerging countries with less developed economy and higher country risks are becoming hotspot for global telecom investors, which are inconsistent with the results of traditional market selection methods. The degree to which extend the influencing factors such as colony, language and other factors have affected the location distribution of telecom operators are not analyzed yet in the existing literatures while this work has been done in this dissertation based on the statistics. Findings suggest that factors play different role in different regions. Latin America is affected significantly by the historical colonial factors. Linguistic and religious factors are important factors in Arab states and regional economic integration factors affected European countries greatly. In African and Asia-Pacific countries, all factors play a less important role as compared with other regions and there is no dominant global telecom operator in Asia-Pacific counties. Therefore, it is suggested that countries which are significantly affected by these factors should be better avoided during the initial stage of investment.2. Market entry ranking is tested to be a key influencing factor on the performance of telecom cross-border operations by using multiple regression analysis method based on a sample of162foreign market entry moves conducted by20international telecom operators in the period from1995to2009. Influencing factors are divided into two types including target country environmental factors and operators’market entry behaviors. Seven hypotheses are proposed based on the relationship between factors and performance and10variables are set accordingly. Three hypotheses are finally tested.Among which, market entry ranking is positively correlated with the operators’operational performance while cross-border performance is negatively affected by the number of competitors in the target countries and the mobile penetration rate. However, Indicators of Global Competitive Index display negative affect on the operators’performance, which is different from the hypotheses. Therefore, it is important for operators to select those countries where they can achieve higher entry ranking. Countries with lower mobile penetration rate and relatively smaller number of competitors should be taken into account in selection and their potential risks which may be brought by the low GCI ranking should be addressed. Those results provide foundation for the indicators of TCS model.3. A TCS model is established and China Mobile is selected to apply the model and evaluation results are given at a detailed country-level. The model is divided into two types as market seeking and follow-the-client respectively. For each type of model, the decision-making procedure will go through driver analysis, target country selection, target country assessment and strategy development. The existing literatures offer suggestions only on regional bases and fail to consider the difference in the factors resulted from the uncertainty of the possible market access statues the operators may have. While based on the previous research findings and the tested hypothesis, the TCS model adopt quantitative indicators in the screening procedure and make a combination of qualitative and quantitative indicators in the assessment procedure so that the assessment can be largely broadened. In the two types of decision-making process,191countries and30countries are screened and assessed and five groups of strategic options are obtained. Research finding suggest that getting minority interest in Singapore telecom or MTN, paying constant concern to wait for the market opening of Ethiopia and Myanmar are recommended options.