Emirates Telecommunications Corporation Strategic Management

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Abstract

In the present world, business competition requires high degree of intelligence, smartness, and innovation in order to match growing list of new entrants into the sector. Similarly, influence from external forces such as political structures, environmental issues, legal structures, and market liberalisation play an integral role in shaping business success. Confinement to profit-making systems slowly goes to extinction as market penetration and control take centre stage in the sector. In order to match growing demand from consumers, management dynamics become vital.

Business managers continue to focus on leadership structures that seek to outsmart their opponents in the sector. Strategic management and planning remain one of the key emerging strategy business leaders undertake to counteract competitors in the market. This paper seeks to analyse strategic management structures using the PESTEL systems and develop a management plan for Emirates Telecommunications Corporation’s management designs.

Executive Summary

Organisations put down several measures to cut down costs and increase productivity. SWOT Analysis presents routine measures many companies use in management. However, this method slowly goes extinct as more emphasis goes to several facets in production systems. Politics, economics, social standards, ecological issues, and legal structures require inclusion in management systems to ensure sustainability. For this reason, PESTEL Analysis tool enjoys wide usage in many organisations’ management systems. Strategic management in telecommunication sector plays a vital role in reducing costs, improving efficiency in services delivery, and maintaining customer base. It develops clear direction and scope of an organisation within a given period enabling achievement of both short term and long-term goals.

Introduction

Business management revolves around change. In many institutions, instigating change remains an up-hill task given the institutionalisation of business and organisation culture within employees. Developing strategies for creating changes in management structures requires adequate analysis and understanding of the business’ strengths, weakness, opportunities, and threats from the competitors. Consequently, integrating issues such as political factors, environmental aspects, legal and policy frameworks, and technological issues into production systems of business helps in the introduction of change that seeks to spur business in greater heights.

Introduction of these facets set out clearly measureable deliverables that enable business leaders to assess success levels of the management structures introduced. In a black box management system, measuring success of business management structures adopted becomes difficult given the dynamism within the completion sector (Martinez 1999). However, with in house integration of all factors as adopted by PESTEL analysis system, such inadequacies vanish given ease of developing success benchmarks.

PESTEL Analysis

PESTEL analysis represents a tool used in identification, understanding, institutionalisation, monitoring, and evaluation of key drivers of change in strategic management of businesses and institutions. The acronym stands for Political, Economic, Social, Technological, Legal, and Environmental factors that require integration into business and/or institution management systems. As a management tool, this system enables business leaders and investors to assess the present environment within the business field.

Similarly, it enables leaders to develop probable future trends in regards to existing dynamic situations. Adopting such a tool in developing organisation goals and objectives places an organisation above its competitors in service delivery and production due to increased efficiency in response to dynamics and changes within the sector (Drucker and Maciariello 2008, p. 45).

PESTEL analysis draws its origin from early works of business management scholars like Francis Aguilar, who in 1967, developed a management performance evaluation and analysis based on economic, technical, political, and social factors. In his book on scanning business dynamism, Auguilar developed ETPS analysis tool that proved vital to businesses.

As more scholars in the business environment joined the research train, improvement into Aguilar’s work arose with several theories coming into force. Brown, on his analysis of strategic business structures transformed ETPS to STEP analysis that represented Strategic Trend Evaluation Process. He further improved his work to STEPE (Social, Economic, Political, and Ecological) factors take into account the environmental factors (Drucker and Maciariello 2008, p. 48).

With increasing research, several versions came into force with political, social, economic, and environmental factors forming the core values employed in evaluation and institutionalisation of business management structures. As the global lobbying for environmental protection and inclusion of people with disabilities into management systems take centre stage, the analysis continues to enjoy a wide range of usage across the globe.

PESTEL analysis enjoys wide use in several sectors such as business planning, marketing, strategic management, product development, and organisational management. Such sectors enjoy the use of PESTEL systems given the fact that it represents an avenue for research and adequate evaluation of factors such as:

Political

Every investment harbour internal and external politics that affects its implementation. Such factors come with both positive and negative impacts thus inadequate integration represents a recipe for failure. Examples of internal politics within a business structure include staff jealousies and backbiting, interrelated departmental structures, and personal interests existing within project implementation designs and methods. Inadequate considerations of such political aspects in project implementation present a difficult working environment reducing effectiveness in production. Developing measures to account for any conflict of interest in project implementation among the employees remains vital in this factor (Donnelly and Harrison 2012, p. 19)

As Donnelly and Harrison (2012, p. 23) further denotes, external political factors in this analysis represent issues that project proponents and investor hold no control over. Issues like employment laws, taxation structures, business controls, regulations, economic stability, insecurity, and trade tariffs influence business outcomes despite existing outside investors’ control and command. Understanding these facets help business leaders analyse new areas of business ventures that present minimal risks and high security. Control markets, business monopoly, and war prone areas represent the high-risk areas that undertaking PESTEL analysis help managers in understanding success probabilities.

Economic

In this factors, business managers and leaders who undertake PESTEL analysis takes into consideration all issue pertaining to both micro economic and macro-economic facets. Micro economic factors represent issues that touching on project feasibility and soundness. Feasibility studies and project success studies help in executing this segment of PESTEL tool. Financial models and book management systems remain vital in these micro economic factors since they help in the analysis of evaluation of project success probabilities (Cook, Macaulay and Coldicott 2004, p. 23).

On the macro-economics’ perspective, this factor takes into account issues like international trade taxes, trade embargoes, global financial crises, economic booms, economic stability, inflation trends, international currency exchange rates, international labour laws, and unemployment trends. Similarly, the cost of living, investment incentive, country-country taxes, trade block regulations, and availability of finance influence business success despite existing outside the influence of business managers and leaders.

Sociological

In this segment, development of strategic management plan takes into account all events bearing influence on social and communal setting. Managers and business leaders hold the obligation to take into plight of the customers and the immediate persons that their production systems affect. Under this factor, it is important to note that some international financing institutions such as International Finance Corporation and the World Bank have systems for assessing project influence on the people and their social status. It is such structures that managers must adhere to ensure successful funding setting ground for advantage over competitors (Cook et al. 2004, p. 26). Sociological factors seek to identify and evaluate social risks and impacts presented by a business and develop mitigation plans to avoid anticipated risks and ameliorate impacts.

Inclusion of social plight of local populace and consumers ensures promotion of social performance among business thus works towards consolidation of business customer base. On the same note sociological factors in this tool allows investors and businesspersons to understand plight of indigenous communities and their social setting. Undertaking business within local structures and appreciation of local cultures in implementation of business plans ensures acceptance of business within a given area leading increased chances of success.

Technological

Under this segment, strategic management requires a dynamic system of software development to withstand the frequency of technological changes setting in the market. Considering technological structures in management systems ensures that changes in technology bears little negative impact on consumer perception on an organisation. Similarly, technological consideration takes into account abilities of organisation employees to use new ideas in production to improve efficiency. Communication and advertisement methods represent some basic beneficiaries of technological advancement in business.

This implies that understanding trending communication gadgets and advertisement methods help organisation develop an edge over competitors. Mainstream media and social media help in advertisement hence companies that appreciate their use enjoy the ability of capturing and maintaining customers in specific age brackets especially the youth. Integrating technological structures in PESTEL analysis thus helps managers to develop trending designs and products thus keeping up with the dynamic needs of consumer needs.

Environmental

Integration of ecological and environmental factors into business management plays a vital role in earning consumer loyalty. Many international business organisations continuously engage in afforestation, conservation, and water tower restoration issues under their corporate social responsibility department as a way engaging communities in environmental friendly issues (Cullen and Parboteeah 2008, p. 103).

Taking into account the struggle for environmental sustainability across the globe, inclusion of environmental issues in business planning and management remains vital (Cook et al. 2004, p. 36). Business structures like solar farm for electricity production, railway construction, oil exploration, and road construction bear great impacts on environmental status. This implies that their implementation represent alteration of the natural environment leading to degradation and loss of some organism.

Mega project financiers such as the World Bank and International Finance Corporation developed a system of environmental and social impact assessment that seeks to explore probable impacts projects present to the environment. Similarly, these financiers follow up on projects to ensure that proper implementation of environmental management plans developed during impact assessment studies (Cullen and Parboteeah 2008, p. 113). In order to stay above competitors, business must develop structures for proper implementation of environmental management plans as well as develop audit reports showing compliance to environmental regulations relevant to host states.

Legal

Under this factor, consideration of legal structures and policy frameworks remains compulsory. Such legal frameworks include local state laws, regional trading block treaties, and international laws relating business finance, employment, and labour relations. Other areas relevant to implementation of legal aspects in strategic management include trade quotas, taxation laws, resources sharing policies, and laws governing international trade (Cook et al. 2004, p. 36). Strict adherence to such structures ensures ease of compliance in business field creating a good rapport with enforcement institutions. Conducive environment for carrying out business helps increase efficiency in production thus leading to increased chances of success.

Figure 1: Showing Points on interaction in PESTEL Analysis

Advantages of PESTEL Analysis Tool

PESTEL analysis tool is less complex and easy to understand. Using this design help leaders and managers understand business structures in a wider scope compared to analysis tools such as SWOT. The vigour of understanding and developing all the factors in this type of style enables leaders to develop strategic thinking skills thus improving their management skills. Similarly, PESTEL analysis reduces effect of probable future threats since it takes into account future pictures of business environment. Since the analysis takes into account future prospects, it enables managers to foresee opportunities and develop ways of effective exploitation (Chen 2001, p. 63).

Demerits of PESTEL Analysis Tool

PESTEL tool use simple data for ease of understanding future and current business environment. Even though this simplification makes it easier to use and maximise production, over simplification of data presents the risk of leaving out vital information. If data misrepresentation occurs, distortions in findings can arise, threatening presentation of real issues on the ground. Similarly, need for data present extra costs to the business. Extra cost in production reduces profit margins (Chen 2001, p. 65).

Industry analysis

Information, communication, and technology sector represent one of the most vibrant sectors in the economy. With a dynamic system that requires constant improvement in management structures, the sector calls for increased training and retraining of employees to meet the continuously changing consumer demand for goods and services. Ever rising variety of services and application to meet information, communication, technology, and entertainment needs of consumers helps put telecommunication firms on toes leading to intense competition for consumer loyalty (Longstaff 2002, p. 34).

Emirates Telecommunications Corporation (ETC), headquartered in Abu Dhabi, United Arab Emirates, remains one of the leading telecommunication service providers across the world. With market shares in more than fifteen countries, Forbes Middle East rated the company 12^th in the world’s leading telecommunication service providers. Boasting of over 150 million subscribers, the company remains a leading market commander in the Middle East. ETC offers wide range of telecommunication services including fixed line phones, mobile phones, internet services, and digital television. The dynamism in this sector compels players in the industry to develop new technologies and software for maintenance of consumer control. Some of the emerging trends in the telecommunications industry include:

Third Generation Mobile Services (3G)

Consumers look forward to employing their voice, data, and video services everywhere all the times. Every day, consumers demand for provision of services that enable them enjoyment of the data, video, and voice services. For this reason, ETC invests billions of dollars in the development of and improvement of mobile phones technologies. Since 3G offers improved services in comparison to 2G, it represent a cheap platform for maintaining customers from relatively low class carders of the economy. In this context, ETC’s provision of such services boosts host countries’ demands for broadband coverage. In the end, the company gains grounds and remains competitive in comparison to competitors.

Worldwide Interoperatabilty for Microwave Access (WiMAX)

This represents one of the most outstanding developments in the wireless communication sector. Developed for remote areas with difficulty in cable supply, this mode of wireless communication and information transfer allows provision of internet and network access in inaccessible places with highly productive data speed. It is important to note that WiMAX enables network access within a radius of twenty-five kilometres.

This coupled with relatively cheap installation and maintenance costs, WiMAX represent the lucrative point of investment in the telecommunication sector. ETC provides WiMAX services in selected areas with an optimistic plan of rolling out the service across the entire market countries. Under this development, voice over internet protocols eases telecast entertainment schedules especially in rural areas with low network coverage.

Infrastructure cost sharing

Increasing productivity requires reduction in the cost of production. Several structures help organisations cut down production costs. Lean working force, contractual engagement of employees, and use of efficient machines form the basic measures black box organisations use to cut down production cost. However, in the telecommunications sector, firms slowly come together to share the cost of infrastructure building (Taylor, Doherty, and McGraw 2008, p. 71).

Apart from reducing environmental degradation that comes with infrastructure development, this trend helps reducing cost of production leading to increased productivity. Infrastructure cost sharing reduces set up cost, lowers cost of individual service providers, and reduces cost of subscription among the consumers. ETC employs this trend to consolidate consumer base through the resulting low service fees on customers.

Threats

Dynamism in this industry calls for continuous market penetration strategies. Developing a new network service provision with detailed components such as switches, transmission lines, equipment, and phone lines cost approximately four thousand US dollars for every customer (Zhu, Ao, and Dai 2011, p. 221). Comparing consumer average payments to subscriptions service, which stands at three hundred and sixty US dollars per year on average and the initial building cost, statistics show that it takes roughly eleven years to get a break though in the telecommunications industry. It is for this reason that established telecommunication firms like ETC enjoy an edge over new market entrants. Security remains a major threat in this industry. Fraud and privacy issues represent huge threats to the telecommunications service providers especially in the wake of increased internationally connected crime groups.

Strategic Management Plan Recommendations

An organization’s success relies on human resource recruitment and retention strategy. Superb policies, clear goals, achievable objectives, and management structure are futile without adequate dedicated employee base (Choo and Bontis 2002, p. 51). Emirates Telecommunications Corporation therefore needs a clear human resource recruitment, development, and strategies to overcome the stiff competition in the market. Strategic human resources management represents the best route to achieving this success. On these platforms, business leaders harbour high chances of success given the integration of different sectors of production into human resource management strategy (Ugboro, Obeng, and Spann 2011, p. 96).

Contents of the Plan

Input

Under this segment, a clearly defined job description remains necessary. Developing clear terms of references with expected deliverables for every post in the organization plays an integral role in ensuring each employee improves productivity. Similarly, such structures improve an organization’s ability to call on employee responsibility in cases of mistakes. Employee recruitment and selection structures exist in this stage. Developing competitive minimum requirement ensures recruitment of highly qualified employees. Inclusion of relevant PESTEL factors in this segment of management plays a vital role in integration of sectorial laws and policies into management plans (Zhu et al. 2011, p. 227). Labour laws on employment and affirmative action represent some of the basic issues that require integration into the plan during this stage.

Employee retention

As a competitive company with highly qualified personnel, ETC needs an unmistakably system of employee development and retention. Wages, salaries, and compensation models present the greatest driver of employee retention. Appreciating employees’ contribution towards productivity with equitable salaries helps in employee retention (Taylor et al. 2008, p. 67).

Similarly, ethically sound systems of salary increments, promotions, and tokens for employees act as enticement to employees. Whenever employees feel appreciated and treated as the basic drivers of company success, issues with job quits become less frequent. In this stage too, inclusion of PESTEL factors help develop structures for success. Socio economic aspects such as host country cultures, beliefs, and consumers reservations remain vital in the development and retention of employees.

Telecommunication sector is a dynamic area of production. Product and services change faster than many organizations can withstand. In order to stay at per with market trends and consumer demands, continuous training and retraining of employee on the emerging issues becomes vital (Galbraith and Kazanjian 1986, p. 47). For example trending mobile phones, latest application, social network advertisements, and promotions for consumers’ benefits represent the ever-dynamic status of the telecommunication industry.

Such adverts and application development must remain in tandem with local cultures and norms. As a fast growing organization, Emirates Telecommunications Corporation must train employees on software development, consumer demands, and trends, and include schedules for achieving specific goals from such trainings. Keeping an updating and trending employee base act as an advantage for the organization’s production needs.

Deliverables

As Kaul (2008 p. 97) notes, in this segment, the ETC develops clear goals and consequences for employee mistakes and failures. Laxity in production translates to dismissal after warning. In case an employee resigns, deliverables set out the conditions for exit. Similarly, deliverables seeks to understand employees’ areas of expertise to employees get jobs within areas of their interests. Conversely, deliverables part of the plan state employee interdepartmental transfers to ensure structured systems of transfer and redeployment. Development of this deliverables and outputs must take into account the local production laws, treaties ratified by host nation, and regulations that govern employment structures in the country.

Figure 2: Cycle of Strategic human resource management.

Conclusion

Telecommunication services represent a vital sector in the economy of the current world. With advancement in technology and development of global village system, communication structures provide vital a basis for information sharing, entertainment, education, and guidance. For this reason, proper and clearly defined systems of management of telecommunication firms help in improvement of service delivery and enhance of consumer lives. PESTEL and industrial analyses, therefore, act as viable tools for management and decision-making in firms.

References

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Choo, C. W., and Bontis, N 2002, The strategic management of intellectual capital and organizational knowledge, Oxford University Press, Oxford.

Cook, S., Macaulay, S., and Coldicott, H 2004, Change management excellence: using the four intelligences for successful organizational change, Kogan Page, London.

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Donnelly, R., and Harrison, G 2012, CIM Coursebook, Taylor & Francis, Hoboken.

Drucker, P., and Maciariello, J. A 2008, Management, CollinsPublishers, New York.

Galbraith, J. R., and Kazanjian, R. K 1986, ‘Organizing to implement strategies of diversity and globalization: The role of matrix designs,’ Human Resource Management, vol. 25, no. 1, pp. 37-54.

Kaul, S 2008 Business models for sustainable telecoms growth in developing economies, Wiley Publisher, Chichester, England.

Longstaff, P 2002, The communications toolkit how to build and regulate any communications business, MIT Press, Cambridge, Massachusetts.

Taylor, T., Doherty, A., and McGraw, P 2008, Managing people in sport organizations a strategic human resource management perspective, Butterworth-Heinemann Publishers, Oxford, UK.

Ugboro, I., Obeng, K., and Spann, O 2011, ‘Strategic Planning as an Effective Tool of Strategic Management in Public Sector Organizations: Evidence from Public Transit Organizations,’ Administration & Society, vol. 43, no.1, pp. 87-123.

Zhu, G., Ao, S., and Dai, J 2011, ‘Estimating the switching costs in wireless telecommunication market’, Nankai Business Review International, vol. 2, no. 2, pp. 213-236.

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