Assessing Etisalat Company Strategic Readiness for the Future (2033)
- Historical Background of the Environment
Etisalat belongs in the telecommunications industry in the United Arab Emirates. This industry is under the supervision and control of the Telecommunications Regulatory Authority. Etisalat has enjoyed a monopoly in United Arabs Emirates for over thirty years as the sole telecommunications and telephone services provider. The company has enjoyed the monopoly created by the telecommunications industry in most parts of the United Arab Emirates in both personal and business telecommunication services, even if modern housing developments and free zones had been instituted. Since 2006, a new internet service and telephone company was established changing the monopoly to a duopoly (Jeffreys & Oxford Business Group, 2011).
The second company; Du offers mobile services throughout the United Arab Emirates. It also offers television and internet services to selected free zones. The telecommunication structure in the United Arab Emirates includes telephones, broadcast media and internet. The industry has over 730,000 blackberry users with over 480,000 of these registered to Etisalat and 250,000 subscribed with Du. There are over 1.825 million land lines effectively ranking the country at number 61 globally. The industry boasts of a global ranking of number 66 with over 11.727 million cellular mobile users. The telecommunications industry in the United Arab Emirates uses the modern fiber optic system with integrated services. The domestic systems use fiber optics, microwave radio relay and a coaxial cable.
The international systems use the international submarine cable, satellite earth stations. The country code for telecommunication services is 971. In the broadcast sector of the industry, most of the media is owned by the government with the exception of numerous organizations operating in the media free zones in Dubai. There is extensive use of satellite dishes providing access to international broadcasts like the pan-Arab stations. 70% of the population in the country has access to internet services. The industry has instituted censorship on the internet and broadcast media (Shalhoub & Qasimi, 2007).
- Company Background
The company is a provider of telecommunication solutions for businesses and individuals around the world but predominantly in the Gulf Region and the United Arab Emirates since its inception in 1976. Since then, the company has innovated modern telecommunications infrastructure, asserted itself as leader in technology, and expanded not only in the United Arab Emirates and the Gulf region but also in other emerging international markets. Since inception, the company has made various milestones. In 1982, the company launched its first mobile network in the Middle East. The ownership structure of the company changed in 1983, with the United Arab Emirates government getting sixty percent of the share in the company and the public owning the remaining forty percent.
In a move to create expertise and a pool of talented engineers in order to spur its future growth, the company established the Etisalat University College in 1989. Through the Federal Law number 1, which was ratified by the United Arab Emirates central government in 1991, the company was able to provide wireless and wired telecommunications services in the United Arab Emirates and countries in other emerging markets. After the introduction of the first Global System for Mobile service in the Middle East in 1994, the company launched the Emirates Data Clearing House, effectively offering complete solutions to Global System for Mobile Service operators (Etisalat, 2013).
After the introduction of internet services in the United Arab Emirates in 1995, Etisalat opened Ebtikar, its SIM card factory and a provider of solutions using smart cards. In 1996, Etisalat invested alongside other corporations in Thuraya, a satellite telecommunications provider. The company helped found e-Marine tasked with the maintenance of international telecommunication cables cutting through the Gulf. In 1999, the company exceeded 800,000 mobile subscribers and also introduced the first broadband internet service in Middle East using ADSL technologies.
The company also bought a stake in a telecommunications operator in Tanzania; Zantel. In the year 2000, the company’s mobile subscribers exceeded one million with the introduction mobile data services using eWap. In the same year, the company introduced the E-Vision brand to augment its cable television services and the Etisalat Academy tasked to provide technical training and professional services. It was not until 2002 that the company reached a 2 million subscriber base with the development of its mobile network to provide the General packet radio service. In the year when the company launched its 3G network, the first in Middle East and multimedia services (MMS) to its subscribers, one million more subscribers added in 2003 bringing its subscriber base to 3 million (Etisalat, 2013).
In the following year; 2004, the company bought a stake in a new fixedline company operating in Sudan, Canar. The company also acquired a license to start operations in Saudi Arabia, where Etihad Etisalat-Mobily was introduced. Its subscriber base exceeded 4.5 million in 2005 effectively exceeding a mobile penetration of a 100%. This is the year when the company significantly expanded internationally with the acquisition of a controlling stake in PTCL, an incumbent operator in Pakistan. The company in the same year acquired a stake in Atlantique Telecom, an operator in West Africa. In the year 2006, the company acquired the license to operate in Egypt and Afghanistan.
The company also began offering blackberry services in the United Arab Emirates. It was in the same year that Etisalat Services Holding was formed to offer mission-critical services related to telecommunications in the industry. These services included e-Real Estate, Tamdeed, E-Facility Management, e-Marine, Etisalat Academy, Ebtikar and Etisalat Directory Services. In 2007, the company bought a stake in Green-field operator based in Nigeria, at the time the fastest growing and largest market in Africa. In the same year, the company invested in Excelcomindo, a leading mobile service provider based in Indonesia (Etisalat, 2013).
The company introduced mobile television in the same year. It was in 2007 that the subscriber base in the United Arab Emirates exceeded 6.7 million and an excess of 60% internet penetration. In the following year; 2008, the company bought a stake in Swan Telecom, later renamed Etisalat DB., effectively consolidating its presence as a telecommunication services provider in the Asian subcontinent after conquering India. In this year, the company completed laying out the nationwide fiber optic cable network, a foundation for the next generation services. It was also in this year that the company was named for the first time the largest carrier in Middle East by the Financial Times Top 500 List (Etisalat, 2013).
In 2009, the company’s subscriber base in the United Arab Emirates exceeded 7.2 million and a half a million broadband subscriber base. The company also introduced the iPhone in Saudi Arabia and the United Arab Emirates for the first time. in the same year, the company acquired a Sri Lankan operator; Tigo and later rebranded it to Etisalat Lanka. In 2010, through its fiber network, the company deployed new services including 3DTV making the United Arab Emirates one of the only five countries at the time to provide the service. Through HSPA+, the company also started offering swifter mobile broadband speeds.
Management Structure
The company is headed by a chairman who is the overall authority of the company and all its subsidiaries. Under the chairman is the Vice Chairman of the board. The Highest executive is the Chief Executive Officer who is answerable to the board. Under the chief executive officer is the Group Chief Marketing Officer. Other executives at this level include the Group Chief Human Resources Officer, Group Chief International Investments Officer, Group Chief Carrier Services Officer, Group Chief Technology Officer, Group Chief Information Officer, Group Chief Procurement & Administration Officer, Group Senior Vice President Corporate Communications, Group Senior Vice President Corporate Regulatory Affairs and Group General Counsel & Corporation Secretary. The company has twelve directors (Etisalat, 2013).
Company’s Current Situation
Market/Product/Service
Etisalat is in the telecommunications market. The company offers a wide array of products and services. Through its Global System for Mobile communications, the company provides the following services: -
- Basic data services
- Subscriber Identity Module card for among other services storage of phone contacts
A General Packet Radio Service that: -
- Extends the Global Service for Mobile network
- Advanced data services
- Web-browsing
The company also provides:-
- Location based services
- Digital video broadcasting-Handheld
- Voice and messaging
Market share
The company has an extensive network through acquisitions in different markets. However, in its home market of United Arab Emirates, there is a cutthroat competition between Etisalat and Du. While Etisalat enjoyed a monopoly of thirty years, the coming of a second provider; Du increased competition in the telecommunications industry in the United Arab Emirates. As at the end of the financial year in 2012, Etisalat had a market share of fifty one percent in the United Arab Emirates market. This is compared to the forty nine percent enjoyed by the second telecommunications company. One of its other investments, Thuraya, enjoys a market share of sixty five percent in all its coverage areas. In Nigeria, the company has market mobile market share of fifteen percent (Library of Congress, 2004).
Competitive position
Competitively, Etisalat is a leader not only in the United Arab Emirates market but also in the Gulf Region. Despite enjoying a superior market share in the United Arab Emirates market, the company has established a superior telecommunications infrastructure that is unrivalled in the region. The company has been named the best international carrier, something its competitors have not achieved. Through acquisitions, the company enjoys an extensive reach in various global markets. It has consolidated its presence in the Asian sub continent by acquiring other telecommunication operators in the region. The company is also thriving in the African market. As such, the company enjoys the enabling environments in different markets, thereby diversifying its risks. Even though it operates solely in the telecommunications industry, the company has still managed to diversify its portfolio. The company offers a wide array of services in the telecommunications industry.
Company Analysis
Vision
The company envisions a world where the reach of different people is not limited by space, distance or matter.
Mission
Since its inception, the company’s mission has been to help people extend their reach.
Goals
It is the goal of the company to develop advanced networks that enable people to learn, develop and grow.
Objectives
In order to meet the goals, vision and mission set out by the company, it has to meet the following objectives.
Environmental scanning
The following were the issues facing the company.
SWOT Analysis
Strengths
- Teamwork: The Company values teamwork and trains its employees to work under such a relationship. It also creates an enabling environment by paying its employees well in order to avoid individual competition.
- Employee empowerment: The Company empowers its employees in order to increase their loyalty and create s smooth environment.
- The company’s Experience: The Company has been in business for a very long period of time. They have been in Existence in the United Arab Emirates before venturing into Egypt and therefore know how to do their work.
- Training Institutions: The two institutions the company established will help it develop manpower to further its strategies.
Weaknesses
- Weak internal cultures in Egypt: As a new entrant in the Egyptian market, the company does not have the required internal culture, something that their rivals enjoy. This will affect their expansion in the in the Egyptian telecommunications market.
- Low pay in Egypt: compared to other countries, the pay in Egypt is inferior. This could lead to an exodus of the company employees to other areas.
- Instruments and Service: the required instruments in order to cover a wide area are still low. This is the most significant weakness of the company.
Opportunities
- Large market: The Egyptian market is large and there is a constant increase in the number of GSM and telecommunication consumers. The company offers lower prices in order to woo consumers from its competitors thereby consolidating its customer base.
- Tax exemptions: after buying the operating license, the company incorporated its taxes. Thus, unlike its competitors, the company can retain a significant percentage of its revenue to be used for acquisitions, enhancements and investments.
- Local support: the company enjoys support from the local authorities thereby granting it a firm foundation to engage in fierce competition with its rivals.
- Uniqueness: Etisalat is the only company in the Egyptian market with unique services that attract attention especially with the sole right to own the technology in Egypt (Plunkett, 2008).
Threats
- A combined alliance: the competitors of Etisalat pose a threat if they were to make an alliance so that any loss of consumers is between themselves and not to Etisalat. This is a threat to the company’s subscriber base.
- Taxes: as espoused earlier, any imposed taxes on the company in any of the markets will have a negative effect on its revenue base. This will in turn affect its expansion plans.
- The Du Factor: the second operator in the United Arab Emirates poses a threat on the operations of Etisalat. In the few years the company has been in existence, it has consolidated a considerable subscriber base.
Strategic Readiness Diagnosis
Strategic Segmentation
The core business of Etisalat is in the telecommunications industry. However, the company has diversified its portfolio by segmenting its business strategy into the following segments:
- Real estate management through e-real estate
- Project management through e-facility management
- Marine consultancy through e-marine
- Training and development
Future turbulence level
Current Strategic Profile
The current strategic profile of the company involves the following :-
- Organize various segments into individual business units
- Diversify the core business to reach new areas
- Innovation of new technology
In order to effectively operationalize the strategy, the company seeks to uphold the following values: -
- Enablement
- Energy
- Openness
Current capability profile
A company’s capability profile is judged on three aspects:-
- Customer focus: the company views the customer both individually and collectively. While it strives to offer competitive prices and innovative services and products for its customers, it also recognizes the communities from which they come. As such, its corporate social responsibility program has been dabbed the best because of its sensitiveness and responsiveness (Davidson, 2008).
- People: the company values its employees immensely. It offers good remuneration in order to preempt individual competition thereby fostering cooperation. The company also trains its employees in its university college in order to build their competencies.
- Resources: the company is the leading telecommunications operator in the Middle East. It has a market value of 22 billion US dollars and generates annual revenues of 9 billion US dollars. This revenue is important for the expansion of the company.
Strategy and capability gaps
People
Customer focus
Resources
Capabilities present profile future profile
The venture in Egypt is responsible for the large gap in the present profile. The lack of the required connections in the new market puts the company at a disadvantage with its competitors. The personnel in the market are not well galvanized into the employee spirit of the company. However, the experience of the company and its resolve to creating beneficial relationships among its employees will prove vital and reduce the gap as envisioned in the future profile.
Recommended actions to fill the sub gaps
The company’s corporate strategy marries into the mission and vision of the company. The mission and vision at Etisalat are well thought out and spell out the development lath that is to be taken by the company. The vision and mission of the company also outline the values and beliefs that govern the operations of the company. In order to fill the sub gaps, the following actions are recommended: -
- Check the growing market share of Du in the United Arab Emirates market.
- Pay more attention to the Egyptian ventures in terms of building collaborations with local authorities.
- Increase the training and skill development for the employees in the Egyptian venture.
- Consolidate its presence in regional markets
Measures to assure effective implementation
In order to assure the effective implementation of the recommended actions, the company ought to enshrine them in its corporate strategy. This is important so that the actions are monitored and evaluated alongside the other provisions of the corporate strategy. It is also important for the company to research on the factors that fueled the exponential growth of Du in order make informed choices and decisions (Pan, 2010).
- Potential problems
There are established operators in the Egyptian market. For instance, Vodafone has established roots in the market. This could present a problem to the company’s vision of expanding and getting a sizeable market share. The exponential growth of Du in the United Arab Emirates is not expected to lose momentum in the near future. This is important in the expansion of the company in that control in the home market is essential in providing the motivation for the company in other markets.
- What should be done?
In order to counter these problems, time should be allowed in order to establish in the Egyptian market. It is noteworthy that the company did not consolidate its position in any market overnight. Market research should also be done in the home market to ascertain the factors influencing the exponential growth experienced by Du.
- Who should do this?
These tasks are the responsibility of the senior management in the company.
Summary
Current situation
Strategy components Strategy factors
Increased growth
Market position
Market differentiation
Product differentiation
Strategic readiness
Etisalat has achieved strategic readiness for the future. The human resource base of the company is well trained and empowered for the challenges of the future. The two training institutions that the company has commissioned continue to produce engineers that the company can use in its various ventures. The revenue base that the company generates annually can be deployed as intangible assets to increase the presence of the company globally. The company is galvanized by the vision and mission and its corporate strategy is geared towards achieving the goals set out.
Major recommendations
- It is recommended that the company checks the growth in subscriber base of its rival in the home market; Du.
- It is also recommended that the company increases its investments in terms of equipment in the Egyptian market in order to effectively compete with its rivals.
References
Davidson, C. M. (2008). Dubai: The vulnerability of success. New York: Columbia University Press.
Etisalat, (2013). http://www.etisalat.ae/eportal/en/home/index.htm
Hamdy, A. et al., (2009). The complete detailed study on Organizational Management and organizational analysis". Available at> http://www.scribd.com/doc/28301900/A- study-on-Organizational-Management-and-organizational-analysis.
Jeffreys, A., & Oxford Business Group. (2011). The report. London: Oxford Business Group.
Library of Congress. (2004). United Arab Emirates: A country study. Whitefish, MT: Kessinger Publishing.
Pan, H. (2010). Africa & Middle East Telecom Monthly Newsletter February 2010. Information Gatekeepers Inc
Plunkett, Jack W. (2008). Plunkett's Telecommunications Industry Almanac 2009. Plunkett Research Ltd.
Shalhoub, Z. K., & Qasimi, S. L. A. (2007). The Diffusion of E-Commerce in Developing Economies: A Resource-based Approach. Cheltenham: Edward Elgar Pub.
