Risks Faced by TA-Orange when Entering Thai Telecom Market: Risk Management Paper

Sample Paper

Words 1,677

What three risks and their specific consequences did TA-Orange face when entering the Thai mobile-phone market? Were they High, Medium, or Low risks?

With the commercial launch, last month of Telecom Asia-Orange, a joint venture between Thai companies CP Group and Telecom Asia and France’s Orange SA, the Thai telecom market has become a competitive free-for-all. Contrary to market expectations, TA-Orange came to market with an aggressive price-cutting strategy aimed at picking up a million subscribers in 2002.

Price competition is relatively new to the Thai mobile-phone market. Throughout the 1990s, Advanced Information Services and Total Access Communications coexisted peacefully, both booking neat profits on high prices and limited services. That started to change when TAC entered a strategic tie-up with Norway’s Telenor in 2000 and subsequently started to trim its handset prices and fees for new subscriptions.

But with all of these factors put in concerned, TA-Orange faced the following risks as well:

(1) Risk of losing high-level management

The commitment, skills, and quality of executives play an important part in the success of the Company. Most of these executives are specialists and their loss may affect the performance of the Company as a whole. In order to prevent such impact, executive-level training has been conducted on an on-going basis for effective replacement in the case of a loss of valuable personnel.

(2) Risks of technological changes

Mobile phone operations require a huge level of technology-related investment, which may put the Company at the risk of extra investment in order to update the system to be in line with the constant changes in technology. At present, the Company has been investing in the digital GSM format, which is the system used by major operators around the world. The current digital GSM technology is in its 2.5 generation stage. This is the base for the development of third-generation technology. This ensures that the Company invests in a system that will be the base for modifications of new technologies in the future.

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