Question: Using the Four-Stage Model of Change Identify Where Citycell falls into.

Introduction

The key factors that affect the ability of a firm to earn an acceptable rate of return on its owners investment are known as the economics of a business. The most important of these factors are competition, technology, and customers. These factors continuously put pressure on the market share and profit margin of a company which leads to a changing economics. The impact of changing economics on well-established companies can be better understood and appreciated within the framework of a Four-Stage Model of Change. This model is shown in the following figure:

STAGE I

STAGE II

STAGE III

STAGE IV

Cost Plus

Cost Management

Revenue Management

Revenue Plus

Changing economics Competition Technology Customers

The four stages of change model provide more than just a framework to judge current business events of an organization. The model also emphasizes the importance of various upcoming economic issues those are identified while moving from one stage to another.

As the main objective of this assignment is to identify the stage at which the telecom company Citycell falls into, it is essential to analyze the companys different business events from the very beginning up till now. Then those events or strategies would be positioned within the Four-Stage Model framework in order to determine the exact Stage where the company falls into.

Analysis of Citycell within the Four-Stage Model of Change Framework

STAGE I: Cost Plus Stage I is also known as the good old days for Citycell as the dominance of the market allowed it to achieve high profit margins by simply marking up its costs to provide with a suitable level of profit. As Citycell was the first telecom company in Bangladesh to introduce CDMA mobile phone services in the year of 1993, it had no other competitor at first and thats why enjoyed the monopoly by putting huge amount of price tag in every products and services to earn excessive amount of profit. But when the GSM technology was introduced in the year of 1997 by GrameenPhone (GP), the market started to became competitive. Because of the cheap GSM technology GP was able to offer better service and handset at below the price level that Citycell was offering. So, customers became more interested on the GP offer with better quality. As a result the technology, competition and customers, these entire changing economics factor started to put pressure on the profit margin and market share of Citycell, which forced it into the Stage II.

STAGE II: Cost Management Under stage II Citycell did face some serious competition. After GP, Aktel joined into the competition in the year of 1997 but Citycell didnt change any strategy dramatically until they found out more pressure from new competitors entering into the market (Teletalk in 2004, Banglalink in 2004 and Warid in 2007). So, this stage II began to occur in the year of 1997 and continued till 2007 when Citycell sought refuge through cost cutting, downsizing, restructuring and reengineering as a means of dealing with these changes. Citycell did cost cutting by improving its logistics, used just in time approach to provide faster services, didnt expand the coverage zone vastly and provide services only to a limited target segment. It downsized by reducing the number of employees within the company, putting more emphasis on efficiency at that time. It restructured the whole pricing format in order to reach the targeted customer. Ultimately it reengineered the whole business strategy to deal with those changes.

STAGE III: Revenue Management At the very end of Stage II Citycell realized that the continual focus on cost had its limits insofar as its ability to increase profits. After all, there is only so much money that a company can save by reducing its workforce or by becoming more efficient. At this point in time the company didnt react to the changing economy. It didnt diversify products; neither expanded the business nor shifted its operation to different market zone to deal with the changing economy. By doing so the company ultimately entered into the final stage directly by skipping Stage III.

STAGE IV: Revenue Plus Stage IV becomes an indispensible stage for Citycell as the full recovery from the impact of changing economics is sought by them now. The company strives for profitable growth and just about all the available strategies and tactics were brought into consideration. It went public in the year of 2008 and started selling shares to expand quickly by using public

investments. The company then started to develop the retail channels of distribution, establish customer service in different areas, simplify the product line by offering economic product and target the lower income customers by offering cheapest handset and call rate, doesnt shift to the GSM technology rather offered some handset which has both CDMA and GSM capability to keep the existing customers , focus only on some best-selling economic handsets, developing products like the Citycell zoom ultra-internet service for the younger generation to deal with the changing economy. These are all continuous strategies implemented by Citycell till today. So, after 2007 till now the company is in Stage IV.

So, in summery the Four-Stage Model of Change for Citycell Company would looks like the following oneSTAGE I Cost Plus Good Old Days Enjoy High profit margin by marking up costs. STAGE II Cost Management Cost cutting, Restructuring, Downsizing, Reengineering. STAGE IV Revenue Plus Full Recovery From Cost Developing the retail channels of distribution, Simplifying the product line, Focusing on some of the best-selling products, Developing products for young generation, Encouraging its representatives to setup their own websites and catalogues.

Conclusion
So, all the companies that were forced by changes in customers, competition and technology to go from stage I to stage II have had to change their strategies in order to move on to stages III and IV. To conclude this assignment it can be state that Citycell is a wellestablished company that has gone through the first two stages and is seeking a firm footing in stage IV after skipping the stage III.

References

Text Book: Managerial Economics- Economic tools for todays decision makers (5th Edition), Paul G. Keat and Philip K. Y. Young

http://www.weeklyblitz.net/988/mobile-telecom-industry-in-bangladesh www.diva-portal.org/smash/get/diva2:121516/FULLTEXT01 www.citycell.com