Matav Case Study

        1st Written Assignment

                    NAME：caiyi zhou   NUID：001617137

  Matav’s current business strategy was international expansion. With its domestic fixed-line business declining and mobile market becoming intensive and saturated. The strategic business plan of Matav threw their attention on overseas market. Matav succeeded in the bid to buy the controlling interest of MakTel through a consortium called Stonebridge in early 2001 considering 10 key criteria such as country risk, market size,market growth and so on.

  This strategy was definitely a big success. In detail, Matav had instilled a market-oriented doctrine and had trained local staff. It successfully transferred its knowledge of a financial control system, professional regulatory management and tariff packages to rebalance fixed line fees. With Matav’s effort, the revenue, EBITDA and number of fixed lines of MakTel all increased significantly. In return, MakTel generated more profits for Matav. More importantly, Matav showed its capability of developing a expertise in Macedonia to Destsche Telekom and made it possible to expand their services to other regions such as Balkans.

  In domestic market, Matav is almost dominant in all of its four lines of business. It has advantages that other companies can never catch up with. Above all, Matav had penetrated a large amount of the market before its competitors start to foray the Hungary market. This is because Matav was privatized from a state-run enterprise called Magyar Posta(Hungarian post), which means matav had a monopoly position when it came out from the government because of no competitors. For a long period of time, Hungarians had no choice but to subscribe Matav. What sounds interesting is that the government even take plenty of measures to increase competition through blocking Matav’s attempt to gain more market share. For example, the government don’t want to see the cable market was being dominated by Matav, consequently, it made the amendment in 2001. However this amendment only help UPC essentially because other companies are permanent mud that does not hold the wall.

  Matav’s another competitive edge was its strategy group which was leading by Balogh. Compared to other companies’ strategy group, Balogh’s group was mature, competent and visionary. Whenever Matav meets difficulty, the strategy will start to analyze the situation and figure out multiple solutions. Besides, it forecast what will happen in the future and propose many measures to help Matav if the revenue growth is slowing down. For instance, Balogh comment: It’s about the making the right strategic choices in a declining industry. When you look at the market and you look at our performance, everything seems OK. So why change? It’s when you see the dark times are coming — you have to decide what you want to do to protect against it. With self-reflection from now and then, Matav can always keep its dominant position among all the companies. Compared to Matav, others are easily eliminated by time.

  The final advantage should be Matav’s parent----- Meutsche Telekom. It’s really cautious,wise and experienced. Matav have to stick to its decision. After Deutsche Telekom took over majority ownership with 59.5 percent interest in Matav, it gave Matav experience from the customer side and technical expertise. There were 30 to 40 expats that came from Germany to help with the network development and reconstruction. Besides, before Matav expand its services to other regions such as Balkan, Deutsche Telekom will double check whether Matav has the capability to develop a expertise in Macedonia. Fortunately, Matav pass the test and seize the chance for further expansion and awesome profits. Another example is that Deutsche Telekom insist Matav remain as an integrated telco because it’s suitable for a small country like Hungary.

  Matav’s international expansion was surely a wise choice for several reasons. Firstly, the domestic fixed line business was declining, mobile market was highly competitive and saturated,as a result international expansion was necessary to realize dynamic growth. You would challenge this option by mentioning other two choices：synergies and organic growth which was also measures to improve the performance. But no one would think rack his or her brain to thinks ways to change internal factors to improve limited revenue while ignoring attractive international markets. That’s to say overseas expansion is a shortcut to dynamic growth.

  On the other hand, telecom industry in many small Europe countries, such as Macedonia and Montenegro lagged behind Hungary for 15-20 years. With the help of Matav, not only the revenue of both sides can increase, but also the whole industry can be boosted to improve people’s quality of life to a new point. That’s what everyone want to see.

  After much deliberation, I recommend international expansion, which can be supported by a lot of reasons. The key of arguments is market development and product development. I will make a overall comparison between these two options and illustrate why international expansion is essentially the best choice.

  Let’s review the advantages and disadvantages of market development. Firstly, it can boost dynamic growth. Then some small telecom companies are available for hunters which is a shortcut for international expansion. Next, matav had experience with the acquisition of MakTel. It had successfully developed executable expertise in  its first test area,which is am edge that other competitors can never imagine. Last but not the least, international markets are not saturated with competition. To any international companies, it’s definitely a “delicious meat”. Next are the exhibits.