Competition: Customers finally getting their day in the sun
Aug 02, 2008
THIS week, telecoms giant, MTN unveiled its new payment plan, the MTN Zone. Under the plan, the subscribers will get discounts on calls within the network, amounting to as much as 99%. The discounts will apply all through the day and will be determined by the amount of call traffic in the particular
By Paul Busharizi
THIS week, telecoms giant, MTN unveiled its new payment plan, the MTN Zone. Under the plan, the subscribers will get discounts on calls within the network, amounting to as much as 99%. The discounts will apply all through the day and will be determined by the amount of call traffic in the particular cell you are in.
So for instance, if you are in a residential area during the day with little calling activity, you might get a 90% discount, while some one on Kampala Road will only have a 10% discount at exactly the same time.
On Friday, MTN announced that 500,000 of their subscribers had switched to the new plan, exceeding their most ambitious projections. MTN has about three million subscribers on its network.
Clearly, this is MTN’s response to Warid’s Megabonus and uganda telecom’s Bonna Bogere discount options.
With this offering, MTN has simultaneously given an incentive for more people to call without giving away anything for free, a win-win situation all around.
Later in the week, the National Social Security Fund (NSSF) announced that it would double the rate of interest on workers’ savings to 14%.
With this single stroke, the fund’s management delivered on a promise it made last year to raise interest rates by percentage point a year to meet a 12% target by 2012.
One need not be a rocket scientist to realise that this jump in interest is made with the inevitable liberalisation of the pension sector in mind.
Under the current regime, workers are supposed to pay a mandatory 5% of their salary to NSSF.
With liberalisation, it is expected workers will be allowed to save with whichever pension scheme they choose.
One can expect that under the new arrangement, workers will be looking for the best returns for their money. By raising the interest in savings to double digits for the first time in its history, NSSF has announced its intentions to compete in a liberalised environment and in the process raised the bar uncomfortably high.
And also this week, Standard Chartered Bank made a pledge to the public to speed up its loan processes or pay a penalty of sh500,000 whenever the bank does not live up to its pledge.
For anybody who dealt with Standard Chartered before 2000, this will seem like a revolution of cataclysmic proportions.
Competition ensures that the customer is truly king. In a situation of no or limited competition, innovation suffers and the customer makes do with whatever is available.
A decade ago for example, it took months to get a phone line from the then Uganda Posts & Telecommunications Corporation and when you eventually got the line, God forbid, that the line to your house needed repair.
There are a few people who remember do-it-yourself repairs on the lines outside their house and the subsequent scratchy reception on the line.
So the challenge for our companies is how to adapt to a new competitive environment.
Michael Potter, who was recently in Kampala to present to the East African Business Summit, who is credited with almost singlehandedly systematising how businesses think about competition, argues that all company strategy should be directed at strengthening the company’s competitive advantage in order for it to flourish in the market.
For starters, our companies will have to start thinking strategically – factoring multiple variables about their operating environment into a long-term plan.
The days of operating like a corner duka just opening the doors for business in the morning and hoping people pass by, are long gone.
Gone are also the days where strategy was reduced to what-you-sell-I-can-sell-too on a grander and fancier scale than local shopkeepers.
Opening up the competitive space is never a popular move, contrary to what the existing players say in public, because it eats into profit margins, reduces job security and forces company officials to refocus on the customer. For us, customers, we are finally getting our day in the sun.
pbusharizi@newvision.co.ug
THIS week, telecoms giant, MTN unveiled its new payment plan, the MTN Zone. Under the plan, the subscribers will get discounts on calls within the network, amounting to as much as 99%. The discounts will apply all through the day and will be determined by the amount of call traffic in the particular cell you are in.
So for instance, if you are in a residential area during the day with little calling activity, you might get a 90% discount, while some one on Kampala Road will only have a 10% discount at exactly the same time.
On Friday, MTN announced that 500,000 of their subscribers had switched to the new plan, exceeding their most ambitious projections. MTN has about three million subscribers on its network.
Clearly, this is MTN’s response to Warid’s Megabonus and uganda telecom’s Bonna Bogere discount options.
With this offering, MTN has simultaneously given an incentive for more people to call without giving away anything for free, a win-win situation all around.
Later in the week, the National Social Security Fund (NSSF) announced that it would double the rate of interest on workers’ savings to 14%.
With this single stroke, the fund’s management delivered on a promise it made last year to raise interest rates by percentage point a year to meet a 12% target by 2012.
One need not be a rocket scientist to realise that this jump in interest is made with the inevitable liberalisation of the pension sector in mind.
Under the current regime, workers are supposed to pay a mandatory 5% of their salary to NSSF.
With liberalisation, it is expected workers will be allowed to save with whichever pension scheme they choose.
One can expect that under the new arrangement, workers will be looking for the best returns for their money. By raising the interest in savings to double digits for the first time in its history, NSSF has announced its intentions to compete in a liberalised environment and in the process raised the bar uncomfortably high.
And also this week, Standard Chartered Bank made a pledge to the public to speed up its loan processes or pay a penalty of sh500,000 whenever the bank does not live up to its pledge.
For anybody who dealt with Standard Chartered before 2000, this will seem like a revolution of cataclysmic proportions.
Competition ensures that the customer is truly king. In a situation of no or limited competition, innovation suffers and the customer makes do with whatever is available.
A decade ago for example, it took months to get a phone line from the then Uganda Posts & Telecommunications Corporation and when you eventually got the line, God forbid, that the line to your house needed repair.
There are a few people who remember do-it-yourself repairs on the lines outside their house and the subsequent scratchy reception on the line.
So the challenge for our companies is how to adapt to a new competitive environment.
Michael Potter, who was recently in Kampala to present to the East African Business Summit, who is credited with almost singlehandedly systematising how businesses think about competition, argues that all company strategy should be directed at strengthening the company’s competitive advantage in order for it to flourish in the market.
For starters, our companies will have to start thinking strategically – factoring multiple variables about their operating environment into a long-term plan.
The days of operating like a corner duka just opening the doors for business in the morning and hoping people pass by, are long gone.
Gone are also the days where strategy was reduced to what-you-sell-I-can-sell-too on a grander and fancier scale than local shopkeepers.
Opening up the competitive space is never a popular move, contrary to what the existing players say in public, because it eats into profit margins, reduces job security and forces company officials to refocus on the customer. For us, customers, we are finally getting our day in the sun.
pbusharizi@newvision.co.ug