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In late March 1999, French car company Renault announced that it had bought a 36.6 percent stake in Japanese Nissan for US$5.4 billion to form an alliance between the two companies. With no experience of running a global operation, and still recovering from a failed attempt to merge with Volvo in 1995, Renault seemed an unlikely candidate to take on Nissan, which with US$20 billion of debt, was verging on bankruptcy. The press and industry analysts were nearly unanimous in their disapproval of the alliance, which one observer referred to as 'a marriage of desperation for both parties.' By March 2004, Renault's investment was worth US$18.4 billion, and was regarded as a successful model by competitors, practitioners and business schools. How did Renault and Nissan achieve this remarkable turnaround? Through a unique approach, beginning with a six-month social initiation phase, which established common ground and concrete opportunities for collaboration between the two companies. Carlos Ghosn (a Renault executive who became Chief Operations Officer of Nissan in 1999, and later Chief Executive Officer) was central to this process, through his introduction of the Nissan Revival Plan. This was a company-wide business initiative with clear targets, which aimed to radically strengthen the company's 'common glue' around the mission of revival. In parallel, the social amalgamation between Renault and Nissan continued through cross-company teams, and nurtured collaboration. In this way, the companies created an environment of genuine trust, loyalty and reciprocity, which in turn enabled them to develop the integration mechanisms needed to forge a top performing global partnership in less than five years.

This is the first of a two-case series. The case series explores Smart Telecommunication Inc's innovative approach to serving low-income customers in the Philippines. The case introduces a framework for developing strategies to serve low-income customers in developing countries - the 4A's. This framework is an adaptation of the classic 4P's of marketing that are likely to have been covered early in any marketing course. Case (A) provides an overview of the mobile phone market in the Philippines as of early 2003, as well as demographic and socioeconomic information. According to analysts, the mobile phone market in the country is heading towards saturation due to the fact that the majority of the population is unable to afford mobile services. It is estimated that in a best-case scenario, 35% of the population will be using a mobile phone by 2008. The CEO of Smart, Napoleon L Nazareno asks if it might be profitable to serve the massive but still untapped pool of low-income consumers, or whether his company should focus on pursuing market development opportunities to increase revenues from existing customers.

The (B) case demonstrates how Smart was able to implement a highly innovative marketing strategy to serve low-income customers. At the heart of this marketing approach was Smart Load, a mobile proposition involving sachet-based pricing (similar to that seen in the fast moving consumer goods (FMCG) world), a revolutionary over-the-air (OTA) mobile reloading technology, and a decentralized distribution approach. Through the implementation of this strategy analysts revised their estimates of market penetration from a maximum 35% of the population, to upwards of 70% by 2008.

Reprint of the 1997 edition: Stratégia és szervezet [Strategy and organization].

This background note is to accompany the case series 'Privatization of Telecommunications in Peru (A) to (E)' (ESMT-305-0041-1, ESMT-305-0042-1, ESMT-305-0043-1, ESMT-305-0044-1, and ESMT-305-0045-1). The global telecommunications industry was worth US$1 trillion by 2000. Its growth in the 20th century was due to its shift from data (telegraph), to voice (telephone), back to data (Internet). In parallel, the explosive growth of wireless, mobile and data transmission products, services and technologies throughout the 1990s had completely changed the industry dynamics. This note looks at the historical background of the industry, the reforms in the 1990s aimed at increased private sector participation and competition, as well as greater regulation. It describes the trends that changed the industry, including: (1) the rise of new, private and multinational mobile telephone operators throughout the 1990s; (2) the evolution of cellular networks; and (3) the establishment of the 3G standard and its increasingly global nature.

NEGBI is a large company that has telecommunication, coordinated by NEGBI PN, as one of its core competences. NEGBI PN had a strong market position based on supplying its high-quality switch, the complex device that connects senders and receivers in telecommunication networks. Changes over the past 20 years meant that many state-owned companies were privatized, forcing telecom suppliers to develop more competitive products. Technological innovations strongly increased the complexity in the market. These factors created a challenge for billing technology to master highly complex tasks. NEGBI PN decided to enter this market, due to its particularly high growth rates. Selling the systems was directed to local branch offices in 96 countries. Large turnover was expected because of the opportunity to reach potential customers world-wide. The challenge for NEGBI PN was to introduce their billing solutions with a solid marketing strategy.

With permission of Emerald

By early 2004 one of the fastest growing mobile virtual network operators (MVNO) in the world was Telmore, a Danish service provider. Since its inception in November 2000, it had captured 9% of the total mobile telephony market in Denmark through a simple, transparent and low cost Internet-based model that had proved a big hit with customers. It had led a massive price decline in mobile prices, with charges for voice calls dropping 54% in 2003 alone. The rapid growth of Telmore had not been unnoticed by the Chairman of easyGroup, Stelios Haji-Ioannou. An evangelist of the power of the Internet to transform long-established business models, Stelios was best known for creating the European discount airline easyJet and founding one of the world's fastest growing car-rental companies, easyRentacar. On observing developments in Denmark, Stelios was sure that a no-frills business model - like the one used to undercut the traditional airlines that did away with large numbers of staff and infrastructure - could radically transform the UK and continental European mobile industry. Could Stelios succeed in taking this model beyond Denmark, and what were the implications for established mobile phone companies in the markets he was aiming to target. This case addresses the themes of value innovation, value chain evolution and industry disruption. It can be taught as a marketing, strategy or operations case, depending on the target audience and industry.