Category: Etisalat

Introduction

What is Etisalat?

With a customer base of 135 million, the Emirates Telecommunications Corporation based in the U.A.E, better known as Etisalat, has grown to become one of largest telecommunications companies in the world spanning several continents with an assortment of products and services ranging from mobile networks to internet service provision (Etisalat’s new frontier, 2009). The success of the company is in part due to its expansion into various global markets such as those in the Middle East, Africa, and various parts of the Asian continent. As indicated by Quisenberry & Griffith (2010,) frontier markets, especially those with few multinational corporations, are ideal locations for the creation of new business ventures due to the potential of becoming a market pioneer which is an enviable position for any company given that a well-entrenched corporation within a particular market can in effect control a majority of the local market’s consumer base for many years (Quisenberry & Griffith, 2010).

What sort of Business Excellence Practices does it utilize?

Based on an examination of current business practices utilized by Etisalat, the most obvious business excellence practice the company currently utilizes is a focus on talent management. The reason behind this is related to the company’s constant expansion into new territories as well as its use of the Investors in People approach when it comes to developing its pool of employees into talented workers that can “take the company to the next level” so to speak (Watts, 2013). Talent management can be described as the process by which a company develops an employee’s skills throughout their time within the company to take on a variety of job roles, as well as to manage their progress up the corporate ladder through a variety of leadership roles. This process also necessitates a reduction in employee “churn rates” which requires the retention of talent within the company to reduce costs associated with training new employees and ensuring that talented individuals do not go to potential rivals within the same industry.

Studies such as those by Vaiman, Scullion & Collings (2012) have indicated that improving and retaining talent within any company is crucial for the success of a business due to way in which talented individuals are drivers for high performance and improved operational processes within a company (Vaiman, Scullion & Collings, 2012). Oldroyd & Morris (2012) point out that it is not the quantity but rather the quality of a company’s workers that drives success no matter the type of business model or the popularity of a product (Oldroyd & Morris, 2012). It is based on this that various business development specialists, such as Oldroyd & Morris (2012), indicate that it is crucial for any company that wishes to expand into different markets (as seen in the case of Etisalat) that their hiring and talent management processes are in line with long term views about retaining employee rather than short term goals of merely keeping a position filled. By allowing a company’s hiring practices and talent management processes to be complacent this can lead to serious detrimental effects on operational performance as well as result in increased costs related to having to fill positions over and over again as well as retrain the necessary individuals to fill them.

With the expansion of Etisalat into new markets comes the potential for various problems to crop up in reducing employee churn rates and ensuring standardization of performance across all levels of the company throughout its various locations (Etisalat heading to buy Maroc Telecom, 2013).

It is based on these factors involving improving a company’s talent pool of employees and retaining talented workers that this paper will examine the current effectiveness of Etisalat’s business excellence model by utilizing the EFQM excellence model as the basis for comparison. This will be done through an examination of talent management from a corporate point of view within the context of the case of a large multinational company such as Etisalat and, as such, will encompass practices that are being implemented within Egypt, the U.A.E or in Etisalat’s other locations around the world. The researcher expects that through an evaluation of the current practices implemented by Etisalat involving talent management, more effective procedures can be implemented which would result in improved performance and a far better competitive advantage for the company.

Methodology

Research Design

The study will utilize a descriptive correlational approach because the participant will be measured once. Furthermore, it is imperative to note that the study will employ a questionnaire technique to collect participant data from Etisalat employees. Also, after giving the questionnaire a short interview will be conducted to gather more information from the employee. According to Sekaran, a questionnaire technique is used when the researcher is principally interested in descriptive, explanatory or exploratory appraisal, as is the case in this study. The justification for choosing a questionnaire approach for this particular study is grounded on the fact that the participant will have the ability to respond to the researcher’s questions more directly.

Research Subjects

Research subjects for this study will consist of various employees/ managers that come from the Etisalat offices in Abu Dhabi. Recruitment for the study will consist of the researcher contacting the necessary HR personnel to schedule a short meeting with some employees to conduct the study. This method of recruitment is being utilized to ensure that proper permission is given resulting in a smoother data collection process for the researcher.

Data Collection

The purpose of a questionnaire is to obtain subjective data, such as attitudes, which are not observable. The interview will provide an opportunity for the research participants to share their knowledge about talent management in Etisalat and their attitude about the use of skill training, job satisfaction and developing job interest in their programs. The researcher will utilize the views garnered through the data collection process to develop a sufficient platform from which effective and above all accurate conclusions can be created. The questions that will be utilized within the study will primarily be guided by the case study objectives established by the researcher.

Data Analysis

The primary method of data analysis in the case of this study involves an individual review. The individual review will primarily be the researcher examining the collected response data from the employees that were given the questionnaires and comparing it to the data obtained from various academic sources. By doing so, this should create a better understanding of how effective Etisalat’s talent management practices are in terms of business excellence. The researcher will then review these main themes and use this information to assist in establishing the key findings of the study. This method of data analysis is appropriate for a qualitative design.

Study Concerns

One potential concern that should be taken into consideration is the potential that the responses given by the study participant are inaccurate or outright false. While the researcher is giving the employees of Etisalat the benefit of the doubt, the fact remains that there is still the potential that the information being given has been crafted in such a way that it was made to ensure that other companies will not be able to determine how the internal operations of Etisalat function. Unfortunately, there is no way for the researcher to verify the information since only research subjects from a single company are being utilized in the study. This methodology exposes the participants to an assortment of risks that need to be taken into consideration during the research process. The main risk the participants will encounter is if any of the answers that criticize or indicate dissatisfaction with talent management leaks. This may have consequences on the attitude and opinion of company officials towards them and can result in victimization. To eliminate this risk, the responses will be kept in an anonymous location. This way, the only way to access the information will be through a procedure that involves the researcher. The project thus observes research ethics in sampling as well as during the data collection process.

Survey Results

Total number of respondents: 15 – Mix of managers and employees

Radar Analysis Examining Talent Management Practices at Etisalat

Addressing the Issue of Employee Motivation

The questionnaire and subsequent interview with the employees revealed that Etisalat acknowledges the fact that developing internal practices and policies is an important facet in talent management since, in the employee’s words, “motivation is a key success factor in any organization since it helps employees to perform more and be more responsible and cooperative to serve the company and enables them to participate in achieving the company’s vision and mission”.

Based on the results, it was shown that the process by which the company goes about doing this is through increasing job motivation in the form of an employee excellence program, a wellness program, a performance dialogue with employees and employing methods of flexible scheduling. The Etisalat excellence program is a reward-based incentive for employees that display a considerable level of performance in meeting the metrics established by the company. As a result, employees who can do so receive a cash incentive in the form of 1,000 AED being added to their salary. Various employee motivation studies note that cash-based incentives are nothing new when it comes to increasing job satisfaction since it encourages employees to work harder since their hard work is rewarded.

The second method of increasing motivation that was noted was through an employee wellness program involving subsidized sporting activities by the company to encourage physical activity. Various studies on employee health and wellness clearly show that physically fit employees have a greater tendency to be more positive and perform well and, as such, the implementation of such a program is well in line with current corporate standards in increasing employee performance (Dewhurst, 2012).

The third positive reinforcement, namely establishing performance dialogue training for managers, has been shown by various studies as increasing employee motivation since it creates a nurturing environment that encourages people to share ideas and to be more relaxed at work. As a result, people become motivated to work hard since their efforts are being recognized and acknowledged by those above them. This is in stark contrast to work environments where no positive reinforcement is present and workers are treated as nothing more than numbers rather than people (James & Mathew, 2012). In such environments, it is often the case that the motivation of workers is quite low and employee churn rates are high. The last method of increasing employee motivation by Etisalat has been through the implementation of a flexible schedule for their employees.

Studies such as those by Ratna & Chawla (2012) reveal that one quality that increased the interest of individuals from the current generation of workers (Gen Y) for particular types of jobs is the inherent flexibilities found within a given position. The concept of flexibility can range from the scheduling and time-off policies that are in place within the company to how a job allows its employees to be creative with what they do instead of following rigid corporate policies.

Compared to previous generations, Gen Y places a higher level of importance on the concept of the work-life balance wherein each aspect complements the other (Ratna & Chawla, 2012). By presenting potential employees with the opportunity to personally adjust their schedules within a reasonable level as well as allow them an appropriate level of freedom in taking time off due to various obligations involving their personal life, this results in a greater level of employee motivation as compared to setting a rigid corporate policy (Ratna & Chawla, 2012).

Implementing Ethical Management Practices

The employees who were interviewed and filled out the questionnaire for the study stated: “ethics is an essential part of the organization’s practice with customers as well as with employees to maintain trust, respect, and loyalty”. As such, Etisalat programs related to employee “empowerment” through positive reinforcement as well as significant internal policies that focus on Corporate Social Responsibility as well as ethical treatment of workers have been implemented.

Other manifestations of ethical management practices within the company take the form of various healthcare and internal methods of investigation and evaluation meant to determine whether employees are being treated properly by their employees. It is through such practices that the study has determined that Etisalat conforms to the methods of ethical management that are related to increased job satisfaction.

Methods of Continuous Development and Leadership Training

Further investigation into the questionnaire results and interviews reveals that Etisalat has implemented three distinct methods of skills development, this takes the form of their internal training program meant to increase the knowledge and ability of employees regarding their current job, the future leader’s program which focuses on developing the up and coming heads of the company and lastly comes the company’s talent pool program.

As described by the research subjects, any staff that participates in overseas projects and succeeds in their respective role will be slated for inclusion into the company’s talent pool. This means that in those who willingly participate in self-improvement programs, training sessions and a variety of other such internal endeavors will be slated for future forms of costly training and promotion. The Etisalat talent pool is a database that contains the names of talented staff from different sections so that when there are any vacancies for senior positions the HR employees will check the talent pool and look for the needed skills and they will nominate a particular individual identified as having the necessary qualities for this new position. It is based on this that it can be seen that Etisalat rewards workers who show a willingness to improve themselves and show consistent levels of high performance. This also similarly conforms to the various facts mentioned within various literary texts related to skills development and the implementation of continuous development programs to encourage employees to stay within a company by helping them improve and as a result become more viable for promotion to higher positions within the company.

Perceived Limitations to the Etisalat Talent Management Program

When asked about the perceived limitations of the Etisalat talent management program the employees that were interviewed stated that the budget, selection process, and performance system (i.e. the system of metrics utilized to examine employee performance) needed to be changed since it was old. Not only that, but the employees also mentioned that additional training programs needed to be included to better prepare the company’s workforce. The employees stated that if given the opportunity they would improve the employee selection method by establishing an assessment center that will be available for newly joined employees or individuals who are slated for promotion. The idea behind this center is that it would allow the employee to attempt exams, case studies, comprehensive assignments, and projects. After completing these tests, the employee will get a report about his/her status and areas that need improvement before being eligible for promotion to a new position.

Conclusion

Talent management and retaining employees is inherently connected to job satisfaction as well as the degree of development and the number of new tasks associated with a job that makes it interesting thus resulting in a far greater degree of interest. Within the context of Etisalat’s talent management business model for excellence, it has resulted in considerable gains for the company as seen in its capacity to both holds onto and attracts talented employees.

Based on the results of the analysis conducted, it has been determined that while talent management itself has been shown as being an effective means of gaining a competitive advantage, it is often necessary to supplement it with methods aimed at creating and increasing job satisfaction to ensure that the effort the company placed in developing a particular employee is not wasted should that employee leave the company due to a lack of sufficient satisfaction with how they are treated in the company.

Such views, when compared to the information gained by the research through the questionnaire and interview with employees at Etisalat, have been proven to be correct given the same level of importance the employees placed on combining methods of talent management with job satisfaction. This study has shown that Etisalat has implemented methods of developing motivation, job interest as well as continuous development as aspects of both talent management and job satisfaction. It is based on this that the researcher has developed the following comparison between the practices of Fortune 100 companies and Etisalat to create effective recommendations for developing better methods of talent management in line with the concept of job satisfaction which will be tackled in the next section.

Recommendation

An examination of current practices by Accenture in their business process outsourcing division within the U.S., India and the Philippines reveals the use of performance-based advancement opportunities as a means of attracting and retaining employees (Caravalho, 2008). This process works by setting a series of metrics that each employee is measured by an evaluation period coming once every 4 to 6 months. Should that particular employee meet the metrics set by the company, they are immediately promoted to the next tier resulting in the possibility of reaching the position of an operations employee within one of the company’s many departments within 2 years (Caravalho, 2008).

Such a method presents itself as a quick opportunity for advancement and, as such, creates a certain degree of appeal for members of the current generation of employees that look towards quick advancement and opportunities rather than developing long term relationships within particular teams (Beyersdorfer, 2012). This method of performance-based advancement is in line with the opinion of various studies regarding the propensity of members of Gen Y to view performance as a method of displaying loyalty and as such further reinforces the applicability of this particular strategy in the case of various global enterprises (Beyersdorfer, 2012). Other top benefits usually offered by companies within the Fortune 100 for the current generation of workers come in the form of the following:

1. 100% employer-paid healthcare premiums as seen in the case of Wholefoods
2. Compressed Workweek and Telecommuting
3. Finally, other benefits that focus on the work-life balance, which is important to employees, come n the form of onsite childcare centers, subsidized gym membership as well as fully paid sabbaticals.

Going back to the correlation between creativity and flexibility, it must be noted that individuals from Gen Y are far more technologically sophisticated as compared to their counterparts from previous generations. Not only that, but they have also been taught to be more independent when it comes to accomplishing certain tasks and solving problems (Edwards, 2012). As such, it is recommended by various experts that to retain Gen Y employees and keep them happy it would be necessary to create an internal business culture that fosters creative thinking (Ananthan & Sudheendra Rao, 2011). Lastly, another standard benefit that is often given to members of Gen Y comes in the form of fully paid advanced training for their particular positions (Ananthan & Sudheendra Rao, 2011). This can come in the form of management classes, technical courses and an assortment of other educational opportunities that are fully paid for by the company. By providing this particular benefit, companies are not only able to improve the quality of their workers but can provide their desired opportunity for advancement.

A comparison of the processes utilized by Fortune 100 companies and those utilized by Etisalat reveal a distinct level of similarity but also a considerable degree of divergence. While it was seen that both parties emphasized the necessity of talent management to create talented employees it was noted that they went about it in distinctly different ways. For Etisalat, promotion, and training go hand in hand and are done over a long period. It was seen that performance initiatives were important (in the form of key performance indicators) but the company places a greater degree of importance on preparing individuals for particular roles and establishing such people as having the necessary qualifications before they are placed into such positions. Fortune 100 companies on the other hand, such as Accenture, seemingly focus more on performance-based initiatives rather than training based methods of promotion wherein individuals that have proven themselves to have a high degree of competence in meeting the metrics of the company are promoted to positions within a short period with training being implemented after such individuals have been slated for placement into such positions with training periods usually lasting a month or less (Kim, 2012).

This is indicative of a distinct divergence in practice that Etisalat should take into consideration given that it has proven to be an effective strategy in getting the right people into the right positions within a short amount of time. Not only that, but it also creates a sense of internal competitiveness within the company that encourages people to work harder and perform better to become more successful. It was seen from the questionnaire and interview data that such a method was not even considered by the talent employees wherein the method of improving the current process of talent management within the company proposed by managers focused on limiting the number of candidates that are promoted to ensure that only the best are placed. The opinion of the researcher in this particular instance is that such a method is inherently redundant given that it would be more effective to place a series of metrics in so that only those who reach them can be promoted rather than waiting for the training to “pay off” so to speak to make sure the right candidate is placed into a particular position (Mohlala, Goldman, & Goosen, 2012).

With the method described by the talented employees, this would result in considerable delays for placing talented people and would, as a result, delay the expansion of the company. It should also be noted that Etisalat used to have an executive mentoring program however it was removed for some reason. This was not a good move on the part of the company since a mentoring program helps to ensure a smoother and above all faster transition rather than letting an employee transition into a particular position through time and experience alone. It is based on this that by reestablishing the mentoring program within the company as well as implementing the various strategies recommended by the researcher in the previous sections when comparing Etisalat to present-day Fortune 100 companies, it can be expected that the company would be able to establish better methods of talent management resulting in more efficient and effective methods of operation for the company.

Appendix

Questionnaire

Reference List

Ananthan, B, & Sudheendra Rao, L 2011, ‘Dynamics of Retention: Practices and Strategies’, SCMS Journal Of Indian Management, vol. 8, no. 4, pp. 120-125

Beyersdorfer, D, Dessain, V, Ton, Z, Hollanders, N, & Barberán, M 2012, ‘Bonuses in Bad Times’, Harvard Business Review, vol. 90, no. 7, pp. 153-157

Caravalho, G 2008, ‘On hiring generation Y’, Public Management, vol. 36, no. 11, p. 7

Dewhurst, M, Pettigrew, M, Srinivasan, R, & Choudhary, V 2012, ‘How multinationals can attract the talent they need’, Mckinsey Quarterly, vol. 3, no. 1, pp. 92-99

Edwards, S 2012, ‘Maintaining the delicate balance when developing high-potential programs’, Public Management, vol. 66, no. 4, p. 60

‘Etisalat’s new frontier’ 2009, Business Middle East, vol. 17, no. 3, p. 4

‘Etisalat heading to buy Maroc Telecom’ 2013, Global Telecoms Business, vol. 147, no.8, p. 17

James, L, & Mathew, L 2012, ‘Employee Retention Strategies: IT Industry’, SCMS Journal Of Indian Management, vol. 9, no. 3, pp. 79-87

Kim, S 2012, ‘The Impact of Human Resource Management on State Government IT Employee Turnover Intentions’, Public Personnel Management, vol. 41, no. 2, p. 257

Mohlala, J, Goldman, G, & Goosen, X 2012, ‘Employee retention within the Information Technology Division of a South African Bank’, South African Journal Of Human Resource Management, vol. 10, no. 2, pp. 1-11

Oldroyd, J, & Morris, S 2012, ‘Catching Falling Stars: A Human Resource Response to Social Capital’s Detrimental Effect of Information Overload on Star Employees’, Academy Of Management Review, vol. 37, no. 3, pp. 396-418

Quisenberry JR., C, & Griffith, B 2010, ‘Frontier Equity Markets: A Primer on the Next Generation of Emerging Markets’, Journal Of Wealth Management, vol. 13, no. 3, pp. 50-58

Ratna, R, & Chawla, S 2012, ‘Key factors of retention and retention strategies in telecom sector’, Global Management Review, vol. 6, no.3, pp. 35-46

Vaiman, V, Scullion, H, & Collings, D 2012, ‘Talent management decision making’, Management Decision, vol. 50, no. 5, pp. 925-941

Watts, M 2013, ‘Etihad Etisalat Company (Mobily)’, MEED: Middle East Economic Digest, vol. 57, no. 19, pp. 24-25

Abstract

Company analysis is of great importance to any person who is engaged in any form of venture. These include managers, directors, investors as well as the evaluators. The findings from the report in the given company will help in making decisions on how to address any challenges as well as future expansions. Investors will also appreciate the information from company analysis so as to make effective decisions as far as investment is concerned. This research report provides information on the Etisalat structure, operational areas as well as all services rendered by the company.

The report will also provide the company with reliable information on the financial performance of the company giving an insight into the effectiveness of policies implemented. This research involved a thorough examination of various credible sources of information especially those from the company. The media which is the public eye has also provided important information about the company and has therefore helped in the submission of a credit report based on extensive research. The report incorporates a thorough investigation of corporate performance by examining specific financial information.

Executive Summary

Etisalat is an Emirates Telecommunication Corporation based in Abu Dhabi. It is among the largest companies in the world with over 135 million customers. It has its operations running in different regions of the world which include Asia, Africa as well as in the Middle East. It has been ranked the 15^th largest company based in telecommunication network operation. During the final year report in 2011, it was honored as the most dominant company in the UAE. This report was compiled by Forbes. The company is engaged in the provision of mobile services for fixed-line data both to individuals as well as companies. It is also involved in data transfer and the provision of high technology services to other companies with submarine cables to service its customers in all regions (Etisalat, 2011).

The company has reported significant revenues in the year 2011 amounting to USD $8.4 billion or AED 31.9 billion in Arabian Currency with a net profit of USD $2.078 billion or EAD 7.631 billion. This was a huge profit made despite tough competition from the other companies such as the Emirates Integrated Telecom (Etisalat, 2011). Etisalat has strong internet connectivity which has dominated the whole of the Middle East as well as other countries. It has an international carrier that has flourished to take a 12^th position in the world in the provision of that service. To add on to that, it has a total of 510 global data roaming agreements transcending more than 186 countries. Services like BlackBerry, 2G as well as 3G networks are provided to the customers and most importantly, the company has ventured in the point of reference popularly known as the PoP in some regions in the United States of America, London and Frankfurt (Etisalat, 2011).

Etisalat Company Analysis

History

The Etisalat Company was successfully established in the year 1976. By then it was operating jointly with another company from Britain. This was the International Aeradio Limited. Within seven years of its inception, the UAE government had acquired 60% of its shares while the other 40% was left to the public for trading. This was an indication of the importance of this company even at this early stage (Schuler, 2002).

In the year 1991, the government enacted a law that allowed the company to expand its services both locally and internationally. To this end, it can be argued that the government used this company as a tool to exploit the international market. This was to be realized by introducing wired and wireless networks. In so doing, the company had the right to own, import and use sophisticated equipment to improve its services. The company received favors from the government which allowed the telecommunication sector to increase growth (Etisalat, 2011). The favors received from the government were to be expected given the huge stake that the government had in this company.

Etisalat has significant interests in other companies around the world. This is how the company has been able to penetrate the world market. As indicated earlier in this paper, the interests span across Africa, Asia and the Middle East among others. The table below shows Etisalat holdings across the globe:

Table 1: Etisalat Holdings across the Globe. Source: Etisalat’s Annual Report 2011

Business Model

Etisalat has multiple units of businesses operating under one roof of its brand. The other services which are unrelated to telecommunication but which are provided by this company range from the training of individuals, consultancy services, smart card manufacturing among others. This is an indication of the company’s vast interests in the global market. The services are offered to other operators including organizations and corporations which contract Etisalat. It is to be noted that Etisalat has its own satellite system named the Thuraya. Thuraya is a space satellite used mostly for mobile services (2dayDubai.com, 2009). The investment in such an infrastructure is an indication of the company’s need to dominate the telecommunication and data industry. With such infrastructure, the company is able to cater to the needs of the rising number of clients.

In 2006, the management felt the need to make the company a customer-focused entity rather than a technology-oriented company with many non- related business units (Etisalat, 2011). In other words, the management realized that there is a need to make the company revolve around the customer by meeting their needs as far as telecommunication is concerned. This led to the restructuring of its operations. The company went ahead and rebranded its logo in May the same year. The restructuring was meant to ensure that the main core of the company is maintained all along regardless of the number of offshoot businesses that are being operated. As a result of this the company has made sure that the operations are run with special attention on the customers. Analysts have attributed most of the success recorded by the company to this strategy (2dayDubai.com, 2009).

Etisalat Services Holding

2011 was one of the most prosperous years as far as the interests of the shareholders are concerned. It is to be noted that this is the year that the management had made great efforts to ensure that the company remains a giant in the telecommunication sector throughout the region (Etisalat, 2011). This was manifested through the various restructurings that were carried out in this period. Under one umbrella of the Etisalat brand, eight business units exist and operate as independent service providers to the customers and to the other operators as well. It came to be referred by many analysts as the independent strategy (Etisalat, 2011). The independent strategy has been successful for three consecutive years and it has been characterized by the stabilization of the management operations. All the units have exhibited tremendous growth both in revenue and profits. This far, units have even exceeded the overall threshold after the implementation of new strategies incorporated in the management system (Etisalat, 2011).

For the company to maintain and satisfy its booming market both locally and internationally, the management has taken into consideration the analysis strategy. The aim here is to manage the strategies applied in all its operations. These include market share, a competitive production as well as regional growth. This was realized by coming up with various Etisalat operating arms. To this end, the management focused on several areas including the Etisalat Academy, Tam Deed Projects, e-Marine, Etisalat Directory Services and finally the Etisalat real estate (Etisalat, 2011). Together, these operating arms had elevated this company in the market making it one of the best performers in the country’s economy. Each of them will be analyzed in detail below:

Etisalat Academy

The company has in its possession a well equipped academy for training its delegates throughout the region. The Etisalat Academy can be conceptualizes as a noble idea by the management and a first among telecommunication industries in UAE and other parts of the world (Boswell, 2003). There were various reasons behind the initiation of the academy. Etisalat (2011) is of the view that the dream to empower the entire nation was realized through the introduction of fully functional college and university. The academy has sophisticated facilities which deliver up to date knowledge and skills in areas like ICT, leadership, consultancy and other telecommunication services.

Since inception, the academy has initiated several projects aimed at promoting the welfare of both the community and the company. For example on May 2010, the key projects initiated by the academy included an international conference which was organized to discuss major development programs with the government. There were other issues which were discussed in this conference. These included issues such as leadership. These are issues that are considered crucial not only to the company but also to the community as a whole. Internationally, the company has displayed its strength by engaging other stakeholders in bilateral and multilateral agreements which are aimed at ensuring that the key projects run smoothly at the international level (Etisalat, 2011).

Etisalat Facilities Management

The Etisalat has a population of about 1,800 staff members (Etisalat, 2011). It is a large workforce by any standards. The services provided by this workforce cover the whole of the UAE region with the use of over 5,000 sites and locations from where clients can be served. The company has facilities and assets which are in different locations both locally and internationally. They are the facilities that enable the company to reach out to the members of the public and the potential clients. These facilities include airports, towers for data transmission and power plants among others. For example, Etisalat has interests in two airports in Abu Dhabi and Sharja. It also operates a mosque. Even though the mosque may not be intended for commercial exploitation, it is to be noted that it is significant as it caters for the spiritual well being of both the workers and members of the public.

The company’s facilities management operation is regarded as one of the best in the region. The company has continued to attract new customers in addition to the already existing clientele base. The clients include Asteco Real Estates and Musanada among others who have become the major customers.

To add on to the thriving state of the company, significant projects have been added to the portfolio. This is for example the GSM network which was established in 35 places to improve the services provided to the corporate and individual clients.

Emirates Data Clearing House (EDCH)

Roaming services have encountered many problems as far as the GSM operators are concerned. This is both in the country and in other places around the world. The management felt the need to address this problem to provide the clients with seamless services. This is through the establishment of the EDCH which has provided a feasible solution to the problem. The services of Emirates Data Clearing House have been extended to large corporations such as the Etisalat, Zain, Warid and many others in the country and in the region. To this end, the companies are enjoying uninterrupted data transfer across all networks both in the country and in other parts of the world.

EDCH has provided Etisalat and other corporations in the region with various benefits in their business operations. For example, the clearing house has realized a 20% percent increase in customers, in the process increasing the revenue for the company. ECDH has been outsourced to one major company which manages the services. This is Teco Company provides the EDCH services using sophisticated data programs. On the other hand the EDCH provides all operators with valuable information helping them establish a stable market niche.

Card Systems

This is another project that has improved the performance of Etisalat over the years. The Ebtikar Card System has expanded into the international market to supply its telecommunication customers with smart cards. Its key areas of operation include Africa, the Middle East as well as Asia.

Etisalat has recorded significant growth in sales volume and customer base after new Micro- SIM cards were introduced in the region. The introduction of the new card system has improved service delivery thus increasing the number of customers served by the company. The international growth has been bolstered by securing and extending services to the airports, banks and government institutions in the country and in the region. It is perhaps one of the reasons why analysts regard the new card system as one of the main drivers of the company’s growth over the years.

Directory Services

The directory services have been instrumental in organizing the company’s international business. The services are reported to involve the campaigns on the global scene. These campaigns are used to draw all the international markets together. The services are used both by mobile internet as well the web based PC applications. Various forms of directories are proposed in order to make the service more effective. Another important project in this category involves the introduction of a yellow page directory which will augment the Iphone industry. It is one of the ways that the company wishes to make an impact in the Iphone and smartphone industry.

E- marine Services

This project is appropriate for the offshore industry. There are various services that are offered or provided by this project. The services provided by this project include consultancy and marine route survey. Analysts are of the view that most importantly, the e- marine services’ project is the backbone on which all telecommunications operations across the globe run.

E- Marine services have affected the operations of Etisalat in different ways. Analysts are of the view that the project has made Etisalat operations easier and more convenient. Last year the marine services covered over 60,000 km which is twice the coverage recorded before the establishment of the project. This is a tremendous improvement and a clear sign that the industry is growing very fast.

E- Real Estate

The project is directed towards the company’s site facilities and properties. Project management is also included in the E- real estate function. In this case the industry‘s properties that are overseas are managed through this project. The aim here is to reduce the operations costs. In the long run, revenues as well profits are maintained at high levels. It is noted that the E- real estate is cost reduction initiative as well as an operations enhancement strategy formulated and implemented by the management.

Business and Corporate Function

So far, the report has provided the reader with information regarding the historical background and the core business that Etisalat is involved in. At this point, the reader has a clear picture of what Etisalat company is all about.

At this juncture, it is important then to look at the major areas in which Etisalat company operates. It has a total of eight business units which range from telecommunications to E- real estate as analyzed above. It renders its services to other companies as well apart from the normal customers at the receiving end. The business has about 135 million customers all over the world and it is still striving to exceed this mark. In the corporate world it is among the top 140 in the listed 500 companies in the world. Since its inception in the year 1976, the growth has been nothing short of exemplary despite various challenges ranging from tough competition to the recent global recession. The recorded growth does not mean that the company has been immune to all of these problems. On the contrary, it has implemented various strategies to maintain the existing customers while on the other hand giving attractive offers to woe the other customers (2dayDubai.com, 2009).

Financial Performance

Introduction

The company has recorded a steady financial growth over the years. Various factors have resulted in this tremendous growth. These include factors such as aggressive marketing, business rebranding among others. The financial performance of the company in the last 9 years is shown in the figure below:

In the year 2010, the world economy experienced the worst financial crisis that affected every functioning industry in the global market. The effects of this crisis were very intense and touched on all operations of the industries including financial and material operations. Despite these negative impacts, Etisalat Company recorded huge profits.

According to the annual reports released last year, various key areas were pointed out as having helped in maintaining the company’s ever increasing profits and shareholdings.

Key Areas

1. First an increase of 34% in profits was achieved after 107 million customers subscribed to the service. During the global financial crisis, many customers rationed their daily expenditures and this posed a challenge in attracting more clients. But this was surmounted after the costs were reduced considerably trend to maintain as well as to attract customers.
2. Another key area that was examined is the increase in revenue which. It increased by 5% during the period. This rose to AED 30.8 billion.
3. The total earnings for the shares went up by 4.2% to settle at 1.2 AED per share.
4. In the year 2010, the dividend per share was lower as compared to last 2011’s dividend which actually increased by 20%. This was reflected by a figure of AED 3.9 Billion.
5. In the year 2011 Etisalat recorded the highest capital spending which was an increase of 74% or AED 6.8 billion as compared to that of the previous year. This shows that the Etisalat projects are always expanding due to the increasing growth in overseas’ operations. The projects were funded frequently in an effort to achieve desirable results. To this end, the company still recorded a cash balance of AED 11.3 billion. This was due to cash flow generation that made it possible to maintain strong credit rates, fund existing projects and pay dividends as well.

However, it is noted that all is not well at Etisalat Company. Just like other companies operating in the competitive and volatile market, the company faces various challenges. For example, the company has a standing debt of AED 7.5 billion. Such a huge debt is not common to the company. The possible causes of this huge debt will be analyzed in subsequent sections of this report.

Financial Results

The industry recorded good returns as far as financial operations are concerned. All this was achieved through continued growth in mobile phone calls’ data as well as the internet services. The effects of this on both profits and revenue were positive. For instance, profits shot up to 16% which to stand at AED 17.6 billion. Revenues on the other hand show an increase of 5% to stand at AED 30.8billion. The earnings per share (herein referred to as EPS) stood at 4% (Etisalat, 2011).

The company has struggled to maintain its position both in current and future markets. This has been achieved through the use of the capital funds to finance other valuable projects on the market as well as launching potential units meant to ensure that the company remains active. These are projects such as fiber to home, strong broad band for the mobile networks and such others which have been the key areas where intensive capital investment has been made. As stated earlier, capital fund rose to 78%. This was a sign that the industry is investing heavily to make sure that all operations are running effectively.

The figure below shows the revenue breakdown for this company at the end of the year 2011:

The financial performance has been subjected to various challenges ranging from high exchange rates to the recent global economic crisis. In spite of this, the industry has recorded significant growth in these difficult market conditions. So far, a debt of AED 4.5 and a liquidity of 11.3 billion were incurred in the year 2010 alone (Etisalat, 2011).

The company has motivated its share holders by ensuring that cash flow emanating from the business is invested in all its business units. Apart from investing the cash flow, the company has used the same to pay dividends as well as reward loyalty from employers and the clients. In the year 2011 the recorded cash flow was AED 10.12 billion while in the year 2010 the cash flow was AED 10.59 billion. The slight decrease in the cash flow was contributed to the sharp decline in the working capital (Etisalat, 2011).

The annual dividend share recommended by the board for the year was AED 0.6 to be awarded for each share held. Although the recommendation has not yet been approved, it was suggested that a final resolution will be made during this year’s annual general meeting [AGM] (Etisalat, 2011).

Strategic Position

This telecommunications giant has continued to dominate the telecommunications industry in the UAE and within the region. Since its inception in 1976, it has maintained the momentum by introducing new services addressing the emerging needs of the customers. The services range from mobile connection to internet connection. The company has moden facilities with an innovative operating system. It has also dominated the international market considering that it has been ranked among the top 500 corporates in the world. Additionally, the company was ranked the 6^th in the MiddleEast as a result of its huge revenues and capitalisation. The company is the only global entity in the UAE outside the oil sector. Consequently Etisalat has made the UAE region to be the most advanced with regard to infrustracture and business oppportunities. This has greatly affected the nation’s economic sector.

Vision Statement

The company’s vision is to uphold a world class mode of communication (Etisalat, 2011). In this case, distance and time should not affect the operations of this company. People are given an opportunity to communicate any time irrespective of distance. This the vision that the Etisalat company upholds. People can travel any time, meet new people and keep intouch with those they have left behind.

Businesses (irrespective of their sizes) are also given an opportunity to expand by tapping into the Etisalat’s ever growing technology and innovations. This will help the business to venture into the international market as well by acquring new markets. As per this vision statement, goods and services can be acquired at different times across the globe while in the long run the company grows stronger and stronger. In a nut shell, the vision statement implies a world where individuals reach is not determined by distance but by technology.

Mission Statement

The Etisalat mission is to expand their services to reach all people. To achieve this mission the company will engage in efforts to develop a strong network connectivity that will bring together all people across the globe. In this case, people will connect and learn from each other as they grow. Businesses on the other hand (regardless of their size or orientation) are envisaged to fulfill their missions as well in tandem with the company. The Etisalat mission is to provide the customers with the latest products and services in the market through innovative technology. The technology will enable people to learn more as they grow.

Values

Three sets of values define the Etisalat Company. These are openness, enablement and energy. These three components make it easy to plan for the future as well as combat any challenges facing the corporation. The policies are meant to maintain a good relationship between the company on one hand and customers, suppliers as well as other companies involved in the transactions on the other hand. The company’s efforts to establish and maintain an atmosphere that favors all stakeholders is a sign of a strong element of sociality that is needed in any form of business.

Openness

In an effort to remain open and transparent, it upholds the responsibility of giving a warm welcome to all the customers, extending friendly gestures and maintaining an element of sociability. This is a move that keeps the corporation at the top of the corporate ladder both in UAE and in the world. Customers as well as the employees deserve to be treated fairly at all times. This raises the question of how the company handles its business operations, the entire workforce and anybody they come into contact with.

Enablement

When it comes to enablement, the management team strives to do what they say they will do. Opportunities are availed to other companies as a result of this corporation’s enablement value. Goals are achieved leading to prosperity in all sectors.

Energy

The final energy component encompasses the strength of the efforts directed towards achieving the objectives of the company. The corporation is equipped to deal with and handle any current and potential challenge. The future is secures through continued exploitation of the opportunities provided.

Corporate Governance

The General Assembly

The corporation takes into consideration the interests of all the shareholders. They are the ones to approve the decisions made in the Annual General Meetings held by the company. Apart from reviewing the financial position of the company, the General Assembly also participates in the auditing of the financial reports provided by the external auditor.

The body makes sure that all recommendations provided by analysts as well as those given by the board of directors are effectively carried out. After the release of the balance sheets, the shareholders may approve or disapprove after analyzing it. Another important aspect of the general assembly is to appoint an external auditing agent to oversee the financial operations. The assembly is well defined and its powers described by the act of the corporation (Etisalat, 2011).

The Board of Directors

The Etisalat Company has a Board of Directors who manages the corporation’s day to day activities and operations. The board comprises of eleven members comprised of a chairman who is elected through the presidential decree and other seven members. The remaining four members are appointed by the private shareholders of the Etisalat Corporation. The board operates for a period of three years after which a new board is elected. The election process is carried out according to the Law of Association set out by the General Assembly of the company. The board has a responsibility to monitor all business activities of the corporation among other duties. However, it is noted that the duties of the board of directors are limited to those prescribed in the article of association (Etisalat, 2011).

The Executive Committee

This committee is also part and parcel of Etisalat Corporation. It is selected by the board of directors in accordance with the article. The executive committee is expected to take control of the business operations. This is for instance making some urgent decisions on behalf of the board of directors. The committee also takes part in the hiring and firing of members of staff, especially those at high positions. Here members of the committee ensure that they hire individuals of high caliber for the corporation. The members also take part in the organization’s day to day activities such as overseeing the implementation of the development plans (Etisalat, 2011).

The committee has significant influence on the way the corporation operates. In this case, the committee closely monitors the corporation’s performance. The most important function of the committee is to review the budget before it is handed over to the board of directors. Finally the committee has a role in reviewing the efficiency the services rendered both to the customers and to the employees. The committee formulates policies touching on how surplus revenue is to be disposed of. The Etisalat tenders are approved by the executive committee which ensures a free and fair tendering process. To this end, the committee ensures that tenders are awarded to the most qualified bidder. Tenders exceeding AED 50 million have to be approved by the committee. Procurement is also evaluated in the same manner by the committee. Proposals for local, regional and international expansion of activities have to be reviewed and approved by the committee before they are implemented.

The Audit Committee

The Audit Committee is comprised of three individuals. It is a subcommittee of the board of directors. Two of the members are selected from the board members and the third one is selected from without the board. They have to hold at least four meetings annually. The role of the committee in the corporation is to monitor the financial processes and report to the board on their findings. To ensure that all operations adhere to the financial regulations, the committee checks whether there are any future risks or current risks needing urgent attention. The committee ensures that all internal processes and procedures are evaluated and acted on accordingly (Etisalat, 2011).

The auditing unit has established an effective mechanism for reporting to the directors on their findings. At the same time it ensures that the leaders and managers operate in accordance with the stipulated procedures for the interest of the corporation. In this case, the committee has the power to recommend to the board of directors who is the best suited person to carry out a given task in the organization. The directors work in hand in hand with the financial management team as well as the internal and external auditors.

Compensation Committee

This is also a subcommittee formed by the board of directors. It is made up of four members. Three of the members are selected from the board of directors while the fourth member is selected from the top management team of the company. This committee deals with matters concerning the staff or the employees as far as compensation is concerned. It is mandated to give directions on such matters concerning the employees. To this end, the committee ensures that their employees are motivated with compensation packages that are both externally and internally equitable. This is to reflect the corporation’s strength and stature in the market. The corporation’s aim is to not only acquire new customers but also to retain the already existing customers who are significant in upholding the name of the company. To achieve this, the employees need to be treated with a touch of class by offering them a competitive remuneration package.

Risk Management Committee

This committee is made up of two members only. One member is drawn from the board of directors while the other one is selected from the corporation’s management team. The committee is tasked with the role of advising the corporation on matters touching on any danger or risk that may occur. The committee also formulates and implements strategies aimed at ensuring that the company averts risks or mitigates the effects of those risks that are faced.

But the main role of the committee is to report on any strategies aimed at safeguarding the corporation’s interests as far as the various possible risks are concerned. The committee has to follow up on those strategies to make sure that the policies suggested are implemented fully for the benefit of the organization (Etisalat, 2011).

The Operating Structure of the Committee

This was a strategy that was implemented in the year 2009. The idea was to have a structured framework to oversee a number of processes in the organization. One such process was the management of the company’s international investment portfolio. This is by ensuring that the management team is not overwhelmed by the efforts made in running both local and international operations. Moreover, the committee has an obligation to win over the shareholders’ trust by convincing them and implementing a solid structure that upholds effective governance. So far the company has seventeen international subsidiaries that need constant monitoring and the committee has committed itself to this. It is in constant communication with the board of directors as well the executive committee regarding the performance of the company and any urgent strategy that should be implemented (Etisalat, 2011).

Ad Hoc Committees

The idea to constantly formulate short term committees that respond to various corporate issues that might have arisen was mooted by the board of directors. The main objective here is to have the issues resolved without necessarily involving the other committees. It is noted that after the resolutions have been structured, the committee stop to exist. To this end, two Ad hoc Committees were formed last year (Etisalat, 2011).

External Environment

The aim of this report is to critically analyze the Etisalat with the aim of understanding what drives the performance of the corporation. To achieve an effective and critical analysis of the company, it is important to look at the external environment of the organization. This is given the fact that the environment affects the performance of this company. The challenges and opportunities presented by the external environment of the organization and their effects on the performance of this company will be discussed in this section. The report will begin by looking at the social environment before embarking on other major areas of interest such as economic, political, technological as well as socio- cultural effects.

Social Environment

The Etisalat Company is mainly composed of employees and shareholders of Arabic background. The environment of this area is hot and dry and the only other economic activity apart from telecommunication is extraction of oil. The region is very dry and cannot support any activity related to agriculture. The only thing residents can turn to is the exploitation of the technology and related potentials to offer services to local and international customers.

The region was in dire need for a platform to expand and invest so as to realize the goals. This has been achieved by investing in the telecommunication industry which has recorded tremendous growth over the years. Etisalat has exploited this potential by providing solutions to other partners facing such challenges.

Investing in the country’s non- agricultural sector has been greatly influenced by factors such as political developments, technological innovations as well as socio-cultural factors.

Economic Environment

To this end the Etisalat Company has established a very competitive economic environment in UAE. This has rejuvenated the economy of the Arab nations. This achievement has been attributed to the region’s giant telecommunication industry and other related operations in the local and international scene. Etisalat Company has successfully promoted investment in the country’s ICT sector. The telecommunication market is expanding on a daily basis and Etisalat is now the largest service provider in the UAE.

Etisalat has been leading the telecommunication market for thirty years in the country. Internet services have also supported the economy further. As already indicated earlier in this report, the corporation has been ranked among the top 500 companies in the world. This is a good sign and is also an indication of the region’s booming economy. The region’s economy has for the longest time relied on the oil sector to boost its foreign income. After the emergence of the telecommunication sector as a major driver of the economy, efforts have been made to ensure that the two complement each other (2dayDubai.com, 2009).

Technological Environment

The Etisalat Corporation has embraced technology which is the major driving force of the company. Technology is the shortest possible route to reach out to the whole world. One of the most significant accomplishments so far was the introduction of the fiber to home network which to improve the services offered to all the customers. The network installation as of last year had covered 89% of the UAE. It is actually the first nation in the world to have its capital city synchronized with such technology.

Another aspect of technology that is being exploited by Etisalat marketers is the launch of eLife services. In this case the company is introducing a cutting edge technology that gives the customers high speed internet connection improving the quality of services offered. Mobile banking system has also been introduced in the market. Customers no longer need to move from one point to the other to conduct their banking transactions. A single press of a button on the phone takes care of all the banking transactions needed. This applies to other financial institutions. Mobile banking has enhanced financial security and has made it possible to avail banking services to remote areas that have been cut out of the process in the past. People who did not have a bank account in the past can now operate one thanks to mobile banking.

Etisalat has integrated technology into its socio-culturall activities. The company showcases new innovations through business promotions. The promotions also address environmental concerns and individuals with special needs. Technology is the most appropriate means of reaching out to the customers and consumers.

Another important area that is supported by technology in the company was realized after the launch of the first satellite to enhance transfer of data for mobile phones. The satellite provides services to other countries in Africa and Asia. The Thuraya satellite has enabled many institutions to carry out missions in other countries. For instance, troops have used the Thuraya system for communication. This was due to the fact that there was no network coverage to connect the army troops with each other.

Other minor implications of technology include the 3G mobile and internet applications which cater for 1.02 million users across the internet.

Political and Legal Environment

The Etisalat Corporation has experienced a peaceful environment as far as political matters are concerned. The government enacted a law that allowed the corporation to provide telecommunication services in the local and regional markets. Of particular importance the government gave Etisalat powers to issue telecommunication licenses. All these factors has enabled the corporation to export its services as well as manufactured equipments to other countries. This was a positive development.

It is also noted that the government has allowed the corporation to purchase telecommunication equipments at subsidized prices. Other preferential treatments include reduced taxes to make sure that its operations runs smoothly. The government has permitted the corporation to engage in innovative activities which are profitable in the Emirates region. The government also helped and supported the corporation to invest in the international market and today, the corporation is operating in two continents and eighteen countries. The government has allowed the local investors to participate not only in the local but also in the international market (Etisalat, 2011). To this end, the corporation exploits the conditions provided by the government which are conducive for growth.

On the other hand political events have altered Etisalat’s operations in a number of ways. There are cases where political events have negatively affected the Etisalat market. For instance, the privatization of PTCL by the government was not transparent. The government seemed to have an upper hand in controlling the initiative. The privatization was contrary to the regulations put in place as far as the privatization process is concerned. The privatization did affect the market share of Etisalat Company in UAE and in the region as a whole.

Socio- Cultural Environment

The Etisalat Corporation is engaged in social welfare in a number of ways. These include providing social services such as education, health and environment conservation. These are activities put in place to reach out to the community. This is the only way that the corporation can effectively reach out to its customers from around the world. Some of these are analyzed below:

Education

The company provides academic scholarships depending on the needs of the country or region under consideration. For instance in the year 2010 the corporation initiated a campaign in Nigeria that involved the adoption of a school. The Nigerian government partnered with the Etisalat Corporation to support education in the country. As a result of this effort, three schools were constructed. The trend was replicated in other countries such as Afghanistan where the company shared knowledge with members of the community. This was through the provision of school facilities which included desk tops and laptops that were given to students and teachers (Etisalat, 2011).

Conservation of the Environment

Etisalat has also been engaged in environmental conservation campaigns. To this end, the corporation has vowed to continue supporting the conservation by reducing carbon usage. This will be done through recycling of waste materials. Plans are underway in the real estate arm of business to use low energy consumption appliances. To reduce environmental pollution, recycled paper is used to manufacture credit cards used by the customers. Unnecessary paper consumption is reduced by encouraging the customers to make use of e- statements that does not degrade the environment. The corporation has received awards for its efforts to promote sustainable environment. It is regarded as one of the corporations in the world engaged in active community outreach. This is after the corporation made efforts to ensure that safe water was available for the members of the community. The company provided purification machines to preserve water and reduce evaporation (Etisalat, 2011).

Health Services

Health issues have also been tackled by the corporation. Combating malaria and HIV/ AIDS have been emphasized on by the corporation. The company has been involved in education and other forms of campaign to promote good health among the citizens in UAE and other parts of the world. Other health issues include the recognition of people with special needs. This is for example addressing the needs of those with visual impairment that are given an opportunity to communicate with the society in a normal way. Special devices are provided to enable them effectively communicate with the other members of the community. This is considering that the company’s external environment is composed of all sorts of people to whom service is directed despite their personal challenges. Etisalat Corporation ensures that every individual has an equal share of their services.

Another important aspect that has been seen to bear fruits is the launch of a customer care system that caters for those with special needs. This is for example the deaf who use sign language to communicate. This service is well adopted for these clients since it incorporates a video system that allows the customer care agent to communicate using sign language. This move has seen the Etisalat Corporation recognized through a social responsibility award in the region.

Humanitarian Services

Still on the external environment, the corporation has been involved in the provision of humanitarian services in emergencies and disasters such as earthquakes and such others. The corporation has whole- heartedly provided financial aid to the communities affected by catastrophic disasters across the globe. This is for instance the recent earth quakes in Asia and Japan. Apart from financial aid the company also ensures that communication services are in place to enable rescuers and other stakeholders responding to the emergency to carry out their work effectively. Free SMS services are provided to respond to the same (Etisalat, 2011).

Sports

Sports can be regarded as an activity that makes it possible for individuals to come together and enjoy themselves. To this end, the corporation has invested extensively in sports as a way of safe- guarding its external environment. All the international branches support sports in their respective countries. For example cricket is a game that has dominated the Pakistan and Afghanistan sporting calendars. The main sponsor of the sport is Etisalat Corporation.

Many international tournaments are sponsored by Etisalat Corporation. School based sports are also supported by the company. One of the most significant initiatives is the FC Barcelona that Etisalat is involved in. The company is actually the main sponsor of Barcelona. Barcelona itself has become more than just a football club by engaging in community based programs meant to address humanitarian needs. The company also works closely with the United Nations to help nations achieve the Millennium Developmental Goals (herein referred to as MDGs). To this end, Barcelona has pledged 1.5 million Euros in the next five years as financial aid to support UNICEF and its humanitarian services (Etisalat, 2011).

Industry Environment

The industry within which Etisalat operates is characterized by the presence of many firms that are engaged in the same business. Etisalat Corporation has a challenge to outdo the competitors to win over the customers in the country, in the region and in the international market. It is noted that the corporation has continued to grow significantly despite the invasion of the market by new players providing similar services. As a result of this, the management has realized that the company has no option but to restructure and revamp operations to remain at the top. This is by maintaining a large and strong customer base (Etisalat, 2011).

The company is faced with challenges not only from the other existing firms but also from potential entrants into the market. The objective of this analysis is to enlighten the management and to prepare them for such detractors. In the process of carrying out its business, the company encounters several draw backs emanating from substitutes in the market. The forces behind the company’s operations play a significant role in the formulation and implementation of the marketing strategy. The forces require substantial bargains that challenge the Etisalat’s supply chain. This paper will put this into perspective so as to help management come up with lasting solutions.

Competition from Related Firms

The major competitors in the same group include France Telecom, MTN Group Limited, Orascom Telecom Holdings and S.A.E among others.

France Telecom has a huge market share in terms of customer base and has the largest geographical coverage. It has more than 190 million customers all over the world. It operates in 32 countries around the globe. It has made considerable investments in wireless and broadband services. It has a business unit (Orange) that serves the corporate clients providing them with defined networks as well as data services. This is a threat to the Etisalat telecommunication services. Any move by France Telecom to expand to other parts of the continent will be a challenge to Etisalat Corporation. On the other hand, Etisalat Corporation will find it difficult to expand to other parts dominated by a rival corporation.

The same is happening with the other telecommunication companies. For instance MTN Corporation has a strong hold on the African market. It has dominated the whole of Nigeria with a 50% market share. Etisalat has made investments in this country but it does not have a sizable market share like that of MTN. MTN also has operations in Iran and in total it has over 130 million customers in Africa alone. As a result of this, Etisalat is faced with the challenge of dealing with these rivals to safeguard its market share. This is in addition to coming up with a strategy to penetrate new markets and acquire new customers (Etisalat, 2011).

Threats from New Entrants

Some years back the company enjoyed virtual monopoly in the whole of UAE. Many customers relied on this company for mobile services, internet services and many others. As a result of the monopoly, it is noted that the services were charged high prices. Three years ago the Du made its way into the market to provide services ranging from mobile data with patches of internet coverage in the whole of UAE. Today, Du has attracted many mobile phone customers and provision of internet services is expanding to cover the entire region. This is significant considering the fact that Du and Etisalat were able to share a network a few months ago.

Etisalat is perceived to lead the pack in this industry. But the company is vulnerable to the new entrants. For instance, the company’s share prices have gone down in the London Stock Exchange. On the same note, an analysis of the new clients subscribing to Etisalat on a yearly basis as compared to that in Du will reveal that the latter is a force to reckon with. For example, Etisalat share of the customer base is about 67% with new about 10,000 new subscribers in a span of three months. Compare this with the fact that Du attracted 159,800 new customers on the previous quarter and controls about 37% of total mobile subscribers in the country and in the region (Etisalat, 2011). As a result of this it can be concluded that Du and such other new entrants pose a threat to the future of Etisalat Company.

Threat of Substitute Products and Services

Whenever a product is introduced to the outside common market the tendency of customers to shift is very high (Porter, 2008). This however should not be perceived as competition per se but rather as a shifting strategy on how customers view a product. Etisalat is facing this challenge. The rise of new markets, new needs and new customers as a result of new technologies affects the corporation negatively. This is in its effort to remain the dominant player both in the local as well as in the international market.

To counter such threats from external agents, the company has made efforts to implement strategies enabling it to emerge as a strong and significant player in the industry. It is noted that the substitutes are in most cases affected by price performance of other substitutes in the market. If the substitute has a fair price, customers will shift to it. Another aspect that influences substitutes is the number of products present in the market. The larger the number the easier it is for a customer to shift from one product to the other.

Bargaining Power of Buyers

This is visible when a customer or a buyer is able to influence the price of commodities or services in the market. The customers are always influenced by the prices that keep changing in the market. Etisalat Corporation has many buyers ranging from the middle men who supply the products and services to the customers who are the end users. In between the various transactions, the buyers put pressure on the firm to adjust to their demands especially when there are new entrants in the market.

Bargaining Power of Suppliers

This is the tendency of those supplying the raw materials and resources or those who are experts in a given field refuse to partner with firms demanding for the higher prices (Wheelen & Hunger, 2008). These scenarios are evident when there are few suppliers or substitutes in the market. Etisalat has faced such a challenge in the past. For instance when they dominate a region, the suppliers tend to increase prices relative to the cost of the firm.

Human Capital and Internal Environment

It is noted that the corporation has received numerous awards as far as performance is concerned. This is both locally and internationally. Analysts are of the view that the credit for this achievement can be directed to the employees who make up the internal environment of the corporation. They have exhibited high levels of expertise characterized by continued dedication in all areas of their work from the local to the international operations.

One of the major initiatives in the year 2010 was to promote continued participation of the employees in the business processes in order to realize the organization’s objectives. High skilled workers are transferred to other business units so as to impart their knowledge and skills to other members of the staff. This way, the management makes sure that skills are transferred from one member of staff to the other. Management in Etisalat Company spreads from the core to the outer crust of the corporation. What this means is that management is centralized. This ensures that all activities are carried out effectively with reduced rates of error.

The Etisalat Corporation is structured in such a way that the management finds it easy to control the operations in the whole world from one local base or center of operation. This enables management to carry out evaluations and other activities aimed at maintaining the organization from the central location. Workers find it easy to function with such a clear- cut organization.

The telecommunications sector requires consistency on the part of the organization if it is to succeed. The consistency applies to the hiring and firing of employees in the organization. This is considering the dynamic nature of the technology sector. There is need for the management to hire people who understand the industry well. To this end, the management finds it necessary to maintain the same group of employees while at the same time trying to update their skills in tandem with the changes that have taken place. On their part, the members of staff need to establish a strong bond between Etisalat Corporation and the customers.

The internal environment is defined by the nature of the resources which motivate members of staff to continue working in the competitive environment. The behavior of the employee also makes up the internal environment. In this case the management at Etisalat ensures that the employees are psychologically and emotionally fit in order to operate effectively. The physical health of the employees is also taken into consideration. To this end, the company has an advantage over the competitors. If management neglects the employees and allows them to disintegrate psychologically, emotionally and physically, the business rivals will take advantage of this and further their economic goals.

The organizational resources are the items, equipments and facilities needed by the employees in order to provide services to the customer. In other words, they are inputs of the employer to the corporation. The inputs are required to form outputs which are relative to the kind of industry that the firm is operating within. Etisalat has a well defined input for the work force. As noted earlier in the report, the corporation has established an academy to train members of staff. This ensures that the employee is well equipped and has the knowledge required to handle the resources availed by the company in serving the customers. The system in the company requires competent employees who are of a high caliber. This is the reason why the organization runs an academy to make sure that the employee is equipped with the latest knowledge in the industry.

Another important aspect of the internal environment in Etisalat Corporation is the ability of different departments to come together in efforts to improve the inputs and in effects the outputs of the employees and the business processes. In most cases this is referred to as synergy advantage. To this end the corporation has incorporated this idea by bringing together several departments in a marketing strategy. This is aimed at helping Etisalat outdo the competitors in the market and remain at the top of the pack.

Finally on internal environment, the company makes sure that it maintains the levels of competence of the employees. The quality of any corporation is defined by the type of employees it has in terms of competence (Belch & Belch, 2006). Due to the competitive nature of Etisalat Corporation, other players in the industry have found it hard to outdo it. This is given that the competitors are unable to replicate what Etisalat does as far as the labor force is concerned. Therefore high level of competence on the part of the workforce is mandatory to ensure success on all operations carried out by the organization. Additionally, it is noted that employees are paid in accordance to their level of competence, skills and experience. Those who are highly skilled, highly competent and highly experienced are paid more than the others. The payment package in Etisalat is highly competitive in the sense that the other corporations cannot afford to pay their employees how Etisalat pays them. This is an added advantage in attracting highly skilled labor force.

At this juncture the report is going to look at various departments so as to determine their effectiveness as far as performance is concerned. These departments include marketing, accounting, operations as well as human resource department.

Marketing Department

A marketing strategy is essential for any business to succeed in a competitive market. This is whereby the products and services of the firm are made known to the customers (Bandrowski, 2000). Etisalat has come up with a detailed strategy of marketing its products and services to the customers. The corporation has put in place strategies to rebrand products and services by launching and re- launching them in the market. Within the corporation’s marketing department, there are different segments that come up with the marketing strategies for the corporation. These ranges from market research, business design and advertising segments.

Etisalat has specialized personnel competent in marketing. Before the launch or re- launch of any service or product in the market, the marketing team sets out to carry out a marketing research on the effectiveness of the service or the product to be introduced in the market. This is done through the social- corporate network that the corporation has established through for example sports, promotions and concerts. These are effective channels for promoting the new products.

There are products and services from different companies which customers can choose from. But Etisalat’s marketing strategy is to make the services and products of the company stand out from those of the competitors. This is by increasing awareness among the consumers. Some products and services have been in the market for so long yet the department continues to advertise them to the consumers in the market to avoid dormancy (Etisalat, 2011).

Research and Development Department

Etisalat Corporation has a department that ensures that the company is able to penetrate the market in spite of the difficult circumstances facing it. These are challenges such as the global financial crisis or competition from other firms. The research and development department assesses not only the local but also the international market. The department analyses the conditions that would affect the operations of the company across the globe as well as assessing new strategies in the market that may boost the company’s profile. From the reports it is clear that the company has expanded internationally and there are many operations taking place. The research department is tasked with the responsibility of studying the surrounding environment and reporting on possible threats and opportunities to the board.

The research encompasses the use of the internet in analyzing the attributes of the market to which the service or product is targeted. The potential competitors are also identified by the department and their possible threat to the corporation identified. The department helps the organization to cut on costs of operation by advising the board on alternative and efficient ways of doing things.

The Accounting and Finance Department

Accounting in general should meet some basic requirements so that it can be used to make critical decisions (Schuler, 2002). This department keeps records of the performance of the corporation as a whole. It provides information that is used by the board in making various decisions for the organization (Porter, 2008). The accounting department should exhibit relevance and reliability to the company. The audits that are carried out quarterly are forwarded to the management team which uses them to determine whether the company is operating at a loss or whether it is making profits (Belch & Belch, 2006).

The entire corporation relies on the audit information to formulate and implement decisions that affect business operations. The accounting department works hand in hand with the other departments to give feedback on the performance of various products and services in the market. The other departments project the future performance of various services and products in the market after reviewing information from the accounts office. The office is equipped with modern equipments and housed in modern facilities that make it possible to analyze each and every commodity in the market. The information is sent to various stock exchange firms so that the shareholders can access information on the performance of their shares. This calls for speedy accounting given that the department has to provide this information on a daily basis.

The accounts department compares information from different companies so that the analysts can tell where the corporation stands in the market. From this information the analysts can determine how the company is performing in the market out there. Another thing about the accounts department is that members of staff are highly qualified and meet defined international standards in ethics and accounting. As a result their operation is relied on by many individuals around the world and who are familiar with the corporation.

Operations and Logistics Department

This department is involved in a number of activities which ranges from material handling to information dispatch. It is a very sensitive department that handles delicate matters which need people who are experienced in logistics work. The Etisalat Corporation has multiple business units both within and without UAE and the logistics personnel makes it possible to manage all the operations across the globe. As a result, business operations run smoothly in all units courtesy of the logistics department.

Although each unit has its own logistics department, the corporation has to carry out geographic positioning of products in different places around the world. So the department ensures that the corporation has its processes geared towards the achievement of the objectives and stipulated goals. For example after printing mobile phone credit cards the department has to transport them at the right time and deliver them to the right place so that the customers can access the commodity in time. Logistics involves distribution, warehousing and transportation from local to international regions and vice versa. The department has to coordinate all the corporation’s activities by managing such issues. In general the department ensures that:

• Services and products are availed to the customers whenever they need them
• Coordination of operations between Etisalat and other companies to meet the goals stipulated (Chesbrough & Rosenbloom, 2002).
• The department has to keep up with other service providers including vendors during transportation
• The department makes sure that in case of customer complaints, the company responds with immediate effect to support the customer.
• The department engages the whole organization in the process of formulating policies to make sure that they are implemented to support the logistics department. This gives them enough time to respond to various logistical issues emanating from other departments (Gordijn, 2002).

Therefore the company has many processes and procedures that the logistics department needs to effectively address.

Information Systems Department

This department handles information collected from all over the world. The corporation has different types of information systems at its disposal. These include data ware housing, geographical information systems, global as well as office automation systems.

Some of the information handled is confidential and needs experts to transfer it from one point to the other without compromising the security. The kind of information includes hard and soft copy data. This is sent out to different business units which then act on the matter urgently. In case of an urgent meeting the information system department is tasked with the role of dispatching an internal circular or memo to everyone in the office. Various offices and departments require various reports to be signed by various committees. The information department team submits the reports to the end user.

Etisalat has a sophisticated information system that incorporates information from around the globe to cater for the needs of the customers, suppliers, employees, shareholders and other stakeholders such as the management. The customer care information system for example includes data for people with special needs. As a result everyone has their needs addressed appropriately through the provision of data and information by this department. The corporation caters for more than 135 million people across the globe. Therefore the information system should be sophisticated enough to cater for this.

At times, the managers require the information system to conduct investigations on various departments. The department helps the managers in achieving the goals envisaged by the corporation by availing information from other industries so as to keep them updated.

Recommendations

In the contemporary world, appropriate corporate governance is required if a given organization is to survive in the market especially in the face of existing global financial crises (Scott & Bruce, 2007). Although most of the national and multinational corporations seem to adhere to all the rules stipulated in the corporation’s ethics, they have been found to omit principles of good governance. The stakeholders in different fields will find it appropriate to incorporate the governing principles in any given corporation. Etisalat Corporation is such one organization. This reveals the difference between the companies that comply and those that do not comply with the recommended principles (Cameron, 2004).

Effectiveness of the Auditors

The recommendations apply mostly to the audit committee. This is after critical analysis was carried out and some errors and discrepancies noted. The said committee is very important and crucial to the operations of Etisalat Corporation. The committee is tasked with the responsibility of ensuring that accurate accounts are forwarded to the executive board and the CEO. From the analytical research carried out, the recommendation will be appropriate if the company is to continue growing to remain the leading corporation in the region (Wagar, 1998).

The accounting committee should be made up of independent minded persons with skills and knowledge in accounting (Thatcher, 2006). The committee should have not less than two members with requisite knowledge in accounting. Also an additional requirement for the committee is that a member should be familiar with business and logistics requirements of the position. From here the external auditors should be under the direct control of the board (Tung & Miller, 2000). The Etisalat board should formulate a charter that the audit committee can use as a point of reference. The whole board of directors should play a role in appointing the auditors (Burke, 2007). If they comprise the process by appointing incompetent persons, they will in turn destroy the integrity of the whole corporation. This is given that the task of the auditors is to protect the integrity of Etisalat Corporation. To this end the following functions of auditors will be appropriate for the corporation:

• They should immediately report to the risk management personnel in case of any possible threats.
• Each and every report submitted should be fair, reliable and consistence since the corporation will base the decisions made on the accounts report.
• The external and internal auditors should independently produce and compare results on regular basis.
• The committee should meet frequently- for example not two times a year but more than four times in a year (Pine & Gilmore, 1999).

Marketing Strategy

In the competitive market with distinct economic growth, Etisalat needs to employ an appropriate marketing strategy that would enable the company to expand its operations more (Wheelen & Hunger, 2008). This should be enacted as soon as possible due to the fact that the competitors harbor the desire to take over the market.

One of the ways through which the company can have a well defined market strategy is by implementing a market research that would be used for strategic decision making. The research will be used for diagnostic purposes. This is for instance where an analysis is carried out on different departments and business units. The general performance will be analyzed. The trend of customers’ behavior in the market will be analyzed too. The studies extend to the distribution, semantic scaling and so on. The detailed study is listed below:

• Semantic scaling: In this context, the corporation needs to judge the customer or consumer’s perception of the product. The idea here would be to try and give the customer what they really want (Andreichuk, 2002).
• Multi- dimensional scaling (MDS) whereby the service or the product is assessed on its effectiveness for the consumer.
• Conjoint analysis will involve requesting the consumer to suggest suitable products and services from a set made available (Barney, 2001).

New Product Diffusion Curve

This criterion will be of great importance especially if there is a new entrant in the market. In this case if a new product is brought into the market, an adaptation strategy should follow to counteract the effects arising from this new product. The plotted graph would show trends of the consumer behavior as specialized mechanisms are put in place (Boswell, 2005).

Performance Orientation

The major objective of any corporation is to have an economic value for those who take part in the business (Frank & Cook, 2005). Meeting this criterion will be of great importance as more resources will be internally generated. In this case the management should formulate long term goals that are for the benefit of the shareholders (Juran, 2002).

Annual Reports

The organization should submit accounting reports that are transparent and which based on accounting ethics. All explanations should be illustrated for the shareholders in a simple and clear way. All challenges encountered during the year should be specified by the accounting committee (Wagar, 1998).

It is important and appropriate for the accounting department to explain any potential risk facing the corporation. This will enable the shareholders to fully comprehend what is going on in the corporation so as to respond effectively.

The annual report should contain the audit committee charter. In the charter, the audit committee will explain and provide illustrations on any information they have acted on. In this context, the charter will require them to sign indicating that the information is true and fair. It is noted that many corporations fail due to the fact that the audit committee fails to state anywhere in the report that the information given has been verified and is therefore reliable. If need be, it should be re- read or re- edited because the image of the corporation is reflected on the accounting information (Burke, 2007)

Another important aspect of the annual report is that the shareholders should be informed of and consulted on any proposals made. This is appropriate because the shareholders have a right to know about the investments carried out so as to vote effectively (Afuah & Tucci, 2003).

Code of Conduct

It is mandatory for any corporation to have laws that define the roles of the employees. A deviation from the code of conduct has in most cases resulted from disclosure in the company. This is a big loss to the shareholders and to avoid this, the code of conduct should be followed to the letter.

To improve effectiveness and transparency, the corporation needs to publish its code of conduct. This is so that in case of any breach of conduct, the public can understand and appropriate disciplinary action carried out (Frank & Cook, 2005).

References

2dayDubai.com. (2009). United Arab Emirates ICT sector and Dubai’s knowledge economy. Web.

Afuah, A., & Tucci, C. (2003). Internet business models and strategies. Boston: McGraw Hill.

Andreichuk, B. (2002). Getting objective about quality. Business Reports, 17(3), 28-38.

Bandrowski, J. (2000). Corporate imagination. New York: Free Press.

Barney, J. (2001). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99-120.

Belch, M. A., & Belch, G. E. (2006). Advertising and promotion: An integrated marketing communications perspective. Boston: McGraw-Hill.

Boswell, L. (2003) The rise and decline of firms. London: Allen and Unwin.

Burke, W. (2007). What human resource practitioners need to know for the twenty-first century. Human Resource, 2(7), 23-24.

Cameron, K. (2004). Strategies for successful organizational downsizing. Human Resource Management, 33(2),189-211.

Chesbrough, H., & Rosenbloom, S. (2002). The role of the business model in capturing value from Innovation: Evidence from XEROX Corporation’s technology spinoff companies. Boston: Harvard Business School.

Etisalat. (2011). Etisalat Misr, Etisalat.ae, 2011, Etisalat Etihad. Abu Dhabi: Mobily.

Frank, R., & Cook, P. (2005). The winner take all society. New York: Free Press.

Gordijn, J. (2002). Value-based requirements engineering – Exploring innovative e-commerce ideas Amsterdam: Vrije University.

Juran, J. M. (2002). On quality. New York: Free Press.

Pine, J., & Gilmore, J. (1999). The experience economy. Boston: Harvard Business School Press.

Porter, M. E. (2008). The five competitive forces that shape strategy. Boston: Harvard Business School.

Schuler, R. (2002). Strategic human resources management: Linking the people with the strategic needs of business. Organizational Dynamics, 21(1), 18-32.

Scott, M., & Bruce, R. (2007). Five stages of growth in business. Long Range Planning, 20(3), 45-52.

Thatcher, M. (2006). The Big challenge facing firms. People Management, 2(15), 20-25.

Tung, R., & Miller, E. (2000). Managing in the twenty-first century: The need for global orientation. Journal of Small Business Management, 4(9), 34-39.

Wagar, T. (1998). Determinants of human resource management practices in firms. Journal of Small Business Management, 36(2), 13-23.

Wheelen, T. L., & Hunger, J. D. (2008). Strategic management and business policy. London: Pearson-Prentice Hall.

Executive Summary

Etisalat is the monopolist telephone and internet communications operator in the UAE with a vast and expansive network stretching across several countries in the Middle East, Asia, and Africa. Its total number of customers as of 2012 is over 170 million individuals (“Annual Report 2016” 2). Being a large multinational corporation, Etisalat faces numerous risks when running its enterprise, ranging from financial and currency risks, compliance risks in regards to national laws and international internet privacy and security standards, operational and management-related risks, and strategic risks in regards to the implementation of new technology and developing the company’s expansion strategy. While Etisalat has a multitude of strong points, many of which arise from their fortified position within the UAE, it also faces numerous risks that arise out of its current model of operation. This report provides relevant data on Etisalat’s financial and enterprise risks and offers recommendations on overcoming them.

Introduction

Etisalat is the biggest telephone and internet communications operator in the UAE. It is a multinational corporation that operates in Asia and the Middle East, covering over 16 countries in its web. The total number of customers as of 2012 is stated to be at circa 170 million individuals (“Annual Report 2016” 3). Its primary service lies in wireless and mobile connections, as it is known to be the world’s 14th largest mobile phone operator, and one of the most powerful corporations in the region. According to the financial reports of 2015, the company’s consolidated revenue stands at over 51 billion AED, with net profit at the end of 2015 is over 8 billion AED (“Annual Report 2016” 3). The company’s total market capitalization rate between 2017 and 2018 balances between 87 and 88 billion AED (“Annual Report 2016” 3).

Within the UAE, Etisalat has a monopoly on all sorts of communications – other companies are not allowed to operate within the borders of the country without getting permission from Etisalat to connect to its web. Naturally, the only companies that operate in the UAE are daughter-companies and subdivisions of Etisalat created solely for domestic use. The biggest daughter-company is Emirates Integrated Telecommunications Company, also known as dU. Etisalat maintains a host of servers and points of presence in all major continents of the world, server locations found in New York, Paris, London, Amsterdam, Frankfurt, and Singapore, which are considered hub cities due to their developed Internet and server infrastructure (“Company Profile”).

The reason for Etisalat’s dominance in the domestic market lies in the fact that it was one of the founding companies in the region that helped develop the country’s widespread telephone and Internet infrastructure. UAE’s vast and all-encompassing internet network was not constructed overnight. It began in 1995, when Etisalat – the country’s leading and only wired and wireless communications provider, began building up the infrastructure required for internet communication within UAE. As it was the only company in the country with the monopoly overall communication, it was in charge of constructing one of the most modernized Internet systems in the Middle East (“History”).

The Internet boom in UAE happened between the years 2002-2005. The world had just emerged out of the recession that happened in the year 2000 and began investing in new technologies again. High oil prices motivated UAE’s economic growth and promoted the prosperity of its citizens. This was very beneficial for internet communication development, as not only the people were able to afford to connect to the internet web, but local companies and businesses were motivated to do so as well. The construction of Dubai Internet City in 1999 and the admittance of foreign technologies into the market facilitated internet growth even further, as Etisalat was enabled to profit from foreign experiences and technologies while maintaining its solid monopoly overall communication (“History”).

By 2009, the construction of an efficient and all-encompassing internet network within the UAE was complete. However, any further development was mitigated by the financial crisis of 2009, which was followed by the oil crisis of 2014. Despite these negative influences, UAE maintains one of the most developed internet networks within GCC up to date, with the majority of the population having access to the Internet from their computers, laptops, and mobile devices (“History”).

However, despite having a solid footing and a long-standing reputation for innovation, as well as substantial government backup, there are various risks that the corporation would need to be prepared for in order to maintain its leading positions not only domestically, but also in the international arena. While the company does not spread its influence outside Asia and the Middle East, various economic and geopolitical factors may have an influence on its business and development. The purpose of this paper is to outline Etisalat’s current risks, evaluate the adequacy of those risks, and analyze the company’s enterprise risk management strategy (“History”).

Potential Risks in Internet and Telecommunications Industry

The Internet and telecommunications industry, just like any other kind of industry, has several risks to it that the companies, big and small, need to account for in their financial and corporate strategies. As a rule, any risk that can be predicted and identified falls into one of the four categories, which are as follows (Griffin):

• Financial Risks – these risks refer to a company’s ability to generate financial revenue, cover its operational expenses, manage its debts, and maintain its financial leverage.
• Compliance Risks – these risks are associated with local and regional governance and legal issues that may force the company to lose profit or even forfeit its property and possessions, in certain cases.
• Strategic Risks – strategic risks are risks generated by the company’s general direction and the pursuit of various strategic goals. They are associated with the maintenance of old products and the introduction of new ones. A failure to choose the right direction in which to expand may cost the company profit, market share, and can even force it out of business.
• Operations Risks – these risks refer to the company’s ability to manage its operations effectively and provide the highest quality of service using the least amount of resources necessary for doing so. In order words, it reflects on the company’s efficiency and various factors that diminish that value.

According to the EY report of 2014, there is a number of risks associated with the Internet and telecommunications that are universal to all companies worldwide. Financial risk, aside from the standard currency exchange risks and revenue drops, also include poorly defined inorganic growth agendas and failures to extract value from network assets (EY 8). Compliance risks are associated with new demands and imperatives for privacy and security, as well as a lack of legal infrastructure in the new markets, where Etisalat is planning to expand towards (EY 8). Operational risks for telecommunication companies include a lack of reliable data in order to estimate the company’s performance and providing new ways of improving organizational efficiency and agility (EY 8). Lastly, strategic risks include marketing research failures, as well as failures to adopt the latest technological advancements and incorporate them into the company’s operational model in order to maintain a competitive edge (EY 8). Of course, for each company, the situation is different, as some risks prevail over others depending on the market specifics, the geopolitical and economic situations, and the positioning of the company.

Etisalat Financial Risks and Risk Management Strategies

According to Etisalat’s 2016 Annual Report, the company identifies several financial risks that have the chance of affecting its assets, profits, and financial integrity. These risks are as follow (“Annual Report 2016” 127):

• Foreign Currency Sensitivity.
• Interest Rate Sensitivity.
• Credit Risk.
• Liquidity Risk.

Foreign currency sensitivity risks for Etisalat arise out of the necessity to convert their profits in other countries to AED, which is the main currency in the UAE, which acts as the company’s base of operations. Since most home currencies do not allow direct conversion to AED, Etisalat is often forced to use the Euro as an intermediary between the two, which exposes the company to additional risks. Currencies involved in Etisalat’s operations include Egyptian pounds, Pakistani rupees, Moroccan Dirhams, and Central African Francs (“Annual Report 2016” 127).

In order to manage this risk, Etisalat chose to decrease the portion of Euro conversion, instead choosing to increase the portion in other currencies and using them to conduct local payments and operations. For example, between 2015 and 2016, the company’s equity ratios for the Euro have dropped from 970 million to 906 million, whereas the portion of Egyptian pounds has increased more than two-fold, from 41 million to 90 million (“Annual Report 2016” 127). The usage of Pakistani rupees has increased tenfold, from circa 2 million to 21 million (“Annual Report 2016” 127). Moroccan dirhams have seen a 50 million increase in use. In addition, in 2016 the company started implementing the Central African Franc as an operational currency, totaling at 32.5 million within the first year (“Annual Report 2016” 127).

According to the Annual report, Etisalat is exposed to interest rate risks due to the fact that it is forced to borrow cash from banks and private entities as both fixed and floating interest rates. At the end of 2015, the company’s net profit was increased by 2% due to a favorable interest rate. The total amount of revenue generated by favorable interest rates was 79 million AED (“Annual Report 2016” 127). The company implements a series of precautionary methods and strategies in order to account for these risks. Etisalat constantly monitors the market’s interest rates and compares them to the current borrowing rates, which serves as the company’s primary tool for determining which actions are to be taken. The company analyzes the current costs of borrowing, future interest rates, favorable terms of debts, and the period during which the implemented interest rates are fixed (“Annual Report 2016” 127).

Credit risks are associated with banking facilities. The company needs to be prepared for an event in which the counterparty is unable to follow its contractual obligations and fail to provide the required credit when necessary. This can result in a potential loss of Etisalat’s trade and receivables, as the company would experience a currency shortage in order to conduct payment operations. In order to counteract this potential crisis, the company chooses its partners very carefully, in order to establish their creditworthiness and to obtain sufficient collateral as a precaution measure against potential defaults. In addition, the company diversifies its banking partners in order to ensure that in the event of default, the potential damage is minimized. According to the financial report, the company’s investment activities are largely centered around the UAE, with 88% of all investments being into the domestic banking system, while the remaining 12% were made outside the country (“Annual Report 2016” 127).

Etisalat’s liquidity risks arising from the amount of money it currently owns to various stakeholders. Every year, the company needs to pay its liabilities or face losses in property, reputation, and potential investors in the future. As of December 2016, the company’s total liabilities account for approximately 56.3 million, out of which 30 million are trade payables and other expenses, 22 million are loan payments, 3.8 million are individual investment payments and licensing expenses, and the rest being financing lease obligations and other expenses. Etisalat manages its liquidity risks by maintaining reserves necessary for paying the projected liabilities for the next year and using banking facilities and reserve facilities in order to monitor the company’s cash flows in order to adjust to any potential changes in the liability payment plans (“Annual Report 2016” 127).

Etisalat’s Compliance Risks and Risk Management Strategies

Etisalat’s compliance risks lie in the field of compliance with various telecommunication laws and procedures acts of different countries, where their branches operate. In the UAE, Etisalat enjoys a position of power due to the fact that the government owns a large margin of the company’s shares, effectively making it a state enterprise. Its monopoly over the Internet and telecommunication spheres means that the country’s telecommunications act is largely tailored to maintain the state’s monopoly. However, in other countries, it is not the same. Etisalat as a foreign company is forced to accommodate various changing rules and regulations, which often a political subtext in order to curb the influence of foreign providers in the alleged countries. For example, Etisalat is currently facing a number of charges in India and Pakistan due to partial failures to comply with various established regulations (Fashogbon).

Privacy and security demands are a large issue for Etisalat, as in the UAE the company allows the government various disclosure preferences to various types of private client information. In addition, the government uses Etisalat’s all-encompassing influence around the country in order to block “undesirable information,” which is a violation of freedom of speech and user rights. Such policies are considered unacceptable in other states. As it stands, the company’s policies in regards to these risks that damage the company’s reputation and have the potential of restricting its activity in the region are reactionary, as it is engaged in lawsuits and remains unaffected on home turf (Fashogbon).

Etisalat’s Operational Risks and Risk Management Strategies

Etisalat is a multinational corporation with numerous branches located in different countries in Asia and the Middle East. According to the company’s employee roster, the total number of company employees exceeds 11,000 in UAE alone, meaning that the organization has a large number of people to manage in day-to-day activities (“Company Profile”). This increases certain risks in regards to the management and operations system, as a larger number of employees means it is harder to effectively manage them, especially since the company’s HQ is located in the UAE, from where Etisalat controls all of its branches. Ineffective management is a persistent problem for Etisalat, as at home it does not have a competitive pressure that would actively force it to improve its management and decision-making systems. Still, the necessity to compete on an international level forced Etisalat to start adopting Total Quality Management (TQM) techniques and Sigma Six in order to increase the company’s efficiency and quality of work.

However, in its implementation of TQM in training and everyday practice, Etisalat ran into a problem of measuring the effectiveness of TQM implementation due to a lack of a comprehensive data gathering and performance measurement system in place. The top management of Etisalat is, thus, skeptical towards TQM’s implementation as it is used to working with numbers, and if the company has no means of measuring the quality of performance, then it is impossible to tell if TQM measures were successful or not (Fashogbon).

Etisalat’s Strategic Risks and Risk Management Strategies

The greatest strategic risks for the Internet and telecommunications industry lie in the company’s ability to identify future trends and adopt new technology in order to remain on top of the technological tree. Etisalat is famous for its dedication to innovation, as the company achieved one of the highest internet penetration rates in its home country, with over 89% of penetration rate (“History”). The company’s current policy is aimed at implementing the newest 4G bandwidth technology in order to increase internet speed and responsiveness in order to maintain its competitive edge.

However, the company’s strategic acumen is not without flaws. Problems with internet speed and connection in UAE have persisted for years, and the prices at the domestic market are still high. The reasons are related to the company’s monopoly over the internet industry – without any competition, Etisalat is free to enforce poor quality on the end users with no repercussions. It also affects the company’s attitude in the other regions, where it does not have the same type of unfair advantage that it enjoys in the UAE. In addition, slow internet speeds are often associated with the implementation of package filtering and spy software. There were reports of Etisalat’s involvement in the Blackberry controversy in 2009, which involved the company installing spyware created by a US company in order to collect data on its users (Fashogbon).

Financial and Enterprise Risk Management Analysis and Recommendations

The company’s financial strategies are well-developed and have been successfully implemented for a significant period of time, particularly when it comes to liquidity and interest risks. The company’s liquidities have been slowly declining from one year to another, meaning that Etisalat is slowly starting to rely on its own monetary assets rather than on borrowed sums and investor shares. However, one of the weaknesses in Etisalat’s financial strategies is associated with investing in large-scale projects in other countries that do not work out, ending up in project suspension and significant investment losses for the company. The development of the network in Nigeria, Iran, and a 2G network fraud in India have been halted due to unsavory practices and risky projections. It is recommended for Etisalat to stop investing large sums of money into regions that are considered unsafe and unstable in a political and economic sense, and wait until the situation in these countries stabilizes (Edwards and Bowen 123).

Etisalat’s compliance risks are largely related to the company’s inability to comply with various national regulations and trying to establish an overwhelming presence in the foreign markets. Issues in Pakistan, Iran, and India are the result of the company’s disobedience with national compliance laws and violating the national security of those states by trying to work using UAE standards and policies in countries that clearly disallow it. The only reasonable recommendation in this situation is to respect the international laws for client privacy and security and comply with all the regional telecommunication protocols in order to avoid unnecessary lawsuits (Edwards and Bowen 135).

In terms of operational risks, the company’s weakness lies in the inability to assess the quality of its own services and the effectiveness of measures implemented to improve the quality of service and the efficiency of operational methods. Any attempts of TQM implementation, which the company currently struggles with, will not be successful until a comprehensive assessment tool is developed. Etisalat should involve itself in a thorough company analysis process that includes multiple surveying and statistical data analysis prior, during, and after implementing TQM on a wide scale (Edwards and Bowen 144).

In regards to strategic risks, Etisalat seems committed to building large and elaborate networks implementing top-tier internet and communication technology both domestically and abroad. However, the inability to provide high-quality service may leave it vulnerable to competition in the outside markets, where they cannot establish a monopoly. In order to overcome this weakness, it is recommended to invest in quality promotion and increasing internet speed and bandwidth. It is also necessary to reconsider the company’s policy towards internet security and privacy by discarding all and any agendas that may compromise the company’s good name, such as data fishing and espionage. Etisalat would need to adopt a less aggressive marketing strategy in order to be accepted into Indian and Pakistani markets without being viewed as a hostile company that may compromise the nation’s security (Edwards and Bowen 192).

Conclusions

Etisalat is a large and powerful Internet and Telecommunications company that holds a dominant position in its home market due to possessing a monopoly on all communications and extensive governmental support. Its dominant position in the UAE is motivated by its long-standing service and being the founding corporation to establish an Internet web in the UAE in the 1990s-2000s. Ever since, it has expanded to other regions in the Middle East, Africa, and Asia, and is considered the 14th largest internet provider in the world. Despite this brilliant history of achievement and a general tendency for financial growth, the company faces a series of risks that are intertwined and stem from one another.

The majority of these risks revolve around aggressive expansionist policies to other regions coupled with a lack of competition at home and systematic violations of customer privacy and security. Other risks revolve around the inability to establish proper mechanisms for improving management agility and implementing effective management practices. Lastly, the company faces financial risks from investing in expensive projects that are shut down due to political reasons, which is an amalgamation of compliance and financing risks. In order to lessen potential losses and minimize these risks, the company needs to conduct a thorough revision of its policies in consideration of financial, compliance, operational, and strategic risks. Having a solid base at home and superior technology allows the company to sustain its losses in other regions, but with the inevitable emergence of local competition, the company may lose significant assets as well as their market share.

Works Cited

“Annual Report 2016,” 2016. Web.

“Company Profile.” Etisalat, 2017. Web.

Edwards, Peter, and Paul Bowen. Risk Management in Project Organisations. Elsevier, 2013.

EY. Top Ten Risks in Telecommunications 2014. 2014. Web.

Fashogbon, Labake. “Etisalat: A promising dream in search of a savior.” This Day. 2017. Web.

Griffin, Dana. “Types of Business Risks.” Chron. Web.

“History.” Etisalat. Web.

Executive Summary

The purpose of this paper is to analyze the business strategies of Etisalat Group; as a result, it conducts the industry and company analysis and assesses the strategic options, market shares, sales projections, and various business scenarios of the last three years to understand the company’s performance. The outcome of this report would assist the top management of Etisalat Group to have an expert opinion that would help it to review and restructure the existing strategies, improve the service quality and performance, and identify the new areas of investment.

Introduction

Etisalat Group is one of the multinational giants in the telecommunications and ICT sector, which started its journey in 1976 as an analog operator in the United Arab Emirates market; now, it is operating in seventeen countries with a market capitalization of the US $36 billion, and working with various technical experts to bring out innovative products and high-quality services. The company established its headquarters in Abu Dhabi, and for the last four decades, it has been consistently fostering its innovative technologies and exploring those in the markets; this has helped it to become the pioneer in the fifth-generation (5G) ICT platforms, and to gain a strong customer base of 163 million globally. The objective of this report is to provide further insight into how the top management of Etisalat Group reviews and renovates the business strategies for sustainable growth in the UAE.

Porter’s Five Forces Analysis for Etisalat

The threat of New Entrants

The risk of new entrants is considerably low since new companies require a large investment to take part in the telecommunication industry; therefore, starting a business in this sector is very hard (Abdullah 1). On the other hand, existing multinational companies have sufficient financial capabilities to enter the UAE telecommunication sector using different entry route strategies; therefore, the government of this country imposed various restrictions and legal barriers in order to decrease the number of competitors in this segment. Abdullah stated that multinational companies implement merger and acquisition strategies ‘to gain competitive advantages’ and share common resources to capture the market share in the UAE; moreover, the government has changed its policy because of the global financial crisis and the new revenue stream (1). However, the government of the country has encouraged new entrants with the incentive of low licensing fees; consequently, new entrants could take the chance to enter in this prospective telecommunication market (Abdullah 1). Conversely, new entrants will face severe challenges because Etisalat has a good infrastructure and strong brand awareness for providing quality solutions to the local customers, for which it would be able to retain loyal clients.

Bargaining power of buyers

The bargaining power of Etisalat’s customer groups varies in different countries, for instance, it has a large number of loyal customers in the UAE because it is the mere competitor here, but the scenario is different in Saudi Arabia and Morocco. At the same time, the customers could switch to other companies while the switching expenditure is minimal; in addition, they are concerned about the price of the products; thus, the overall bargaining power of the buyers is medium.

Bargaining Power of Suppliers

According to the annual report of Etisalat, the company has significantly reduced its operating costs by negotiating with its dependable suppliers to decrease procurement expenses. It has been argued that it is one of the largest business organizations in the UAE, which gives it the opportunity to exercise huge bargaining power over the suppliers; moreover, new product development depends on the innovatory solutions of the suppliers. On the other hand, mainly two companies control the telecommunications industry in the UAE, for which the bargaining power of the suppliers is relatively low; however, Etisalat should include flexible provisions in the agreements with suppliers.

Threat of Substitutes

The threat of substitute products is comparatively high in the telecommunication industry of the country because the customers are free to use e-mails, Facebook, Google, or Yahoo messengers, twitter, and many other social networking solutions to communicate instantly with each other. It is notable that Etisalat provides both landline and mobile telephony services, for which it has to face minimal risks from substitutes; in addition, new invention always attracts the customers of the telecommunication industry (Abdullah 1).

Competitive Rivalry

According to the statement of the Chief Executive Officer of Etisalat, the company is in a strong position to overcome the possible challenges and carry on mega and complex digital projects. The competition between the two existing companies is extremely high because both companies intend to capture the leading position by attracting the customers of other companies since these organizations have the financial stability to compete with the latest technology. It is important to argue that according to the annual report of 2016, Etisalat has launched the first-ever 3G network in the Middle East market and introduced 4G (LTE) for the customers in the UAE.

Industry Analysis

It has been reported that the telecom industry giant and the ICT service provider Etisalat has successfully continued its uninterrupted growth by collaborating with the third parties in introducing new business solutions to leverage broadband infrastructure, and such growth trend would persist until Expo 2020 Dubai (Growing Market Saturation in Dubai Telecoms Increasing Competition for High-Quality Content 1). Irrespective of the challenges in the telecom industry, Etisalat and DU continues to be the two major duopolistic players in the UAE market, even though Al Yah Satellite Communications, Al Yah Satellite, and Media Zone have recently entered the market for satellite services and LG Electronics has penetrated through collaboration with Etisalat for IP-based security.

Company Analysis

Current ratio

Table 1: Current Ratio. Source: Self generated.

The current ratio of the company has been improving gradually from 2014 to 2016; whilst in 2014 and 2015, the ratio was less than one; it rose above one in 2016. This indicates that the company has recovered from the potential risk of bankruptcy in recent years because a current ratio below one represents that the liabilities are higher than assets.

Quick Ratio

Table 2: Quick ratio. Source: Self generated.

It is crucial to note that the business’s liquidity position has enhanced in the previous year since the higher the quick ratio, the better is the company’s liquidity situation. In 2016, it was above one, even though in the 2014 to 2015 period, the ratio was much lower.

Debt-to-Worth Ratio

Table 3: Debt-to-worth ratio. Source: Self generated.

Throughout the three years, there were fluctuations in the debt-to-worth ratio – it is necessary for companies to keep this ratio lower because a higher ratio could indicate a risky situation for the creditors of the business. The ratio finally developed in 2016 and it is highly essential for the company to maintain this scenario in the longer run.

Gross Profit Margin

Table 4: Gross profit margin. Source: Self-generated.

The gross profit margin has been noticed to decrease gradually; in 2014, it was much higher than in 2015, and in 2016, it again lowered slightly. It is highly essential for the company to increase this figure in the upcoming years in order to attract new investors.

Net Margin

Table 5: Net profit margin. Source: Self generated.

NPM is a vital ratio and it directly shows the real condition of a firm’s financial health – as a result, from the above table, investors can get a quick glimpse of the company’s internal scenario, and allow the business to decide whether the current strategies are working or not. It is notable that the company’s net profit margin has slowly lessened over the period, and it reached the lowest point in 2016. This should be revitalized as quickly as possible in order to bring back the business to its full form.

Return on assets (ROA)

Table 6: Return on total assets. Source: Self-generated.

The return on total assets has developed in 2016 in comparison to 2015; this is indeed a noteworthy improvement since ROA remains a vital point of reference for the investors. However, the company should seek ways to develop it further in the upcoming financial years through the adoption of suitable strategies.

Total assets turnover

Table 7: Total assets turnover. Source: Self generated.

The above figures illustrate how competent the firm is at the utilization of its existing assets in order to accumulate the sales revenue; it is apparent from the table above that the business remained successful in boosting up this figure in the 2015 to 2016 period.

Return on Investment (ROI)

Table 8: Return on total assets. Source: Self-generated.

The return on investment ratio shows the extent to which an investment remained successful; it is essential to argue that the company’s efficiency has increased in terms of ROI in the recent years in comparison to 2014 – this effectiveness should be maintained over the longer period.

Debt Equity Ratio

Table 9: Debt Equity Ratio. Source: Self-generated.

This ratio would indicate a firm’s financial leverage; it is apparently arguable from the table above that the debt-equity ratio of the business has increased throughout the period, and in 2016, it reached the highest point. This indicates that the business is trying to be more capital intensive in the current year in comparison with the previous years.

Customer Analysis

According to the annual report (2016), the company enjoys a strong base of 162 million satisfied consumers both in-home and foreign markets, and it has been able to come up with apt business organizations, smart individuals, retail outlets, and governmental agencies, whilst striving for the highest level of customer satisfaction by meeting the increasing demands of people for a better experience. With its innovative solutions in the fields of LAN, GSM, 4G, 5G, Internet connectivity, security, and cloud service, it has been able to boost its customer base every year in 17 countries; for instance, its customer base was 54 million in Morocco, nearly 20 million in Nigeria, and 22 million in Pakistan, representing a total increase of 8% in 2016.

SWOT Analysis of Etisalat

Strengths

• Brand Awareness: being a government-owned company, Etisalat has a strong brand image in the national market, and it operates in 19 countries all over the world with huge success (Haseeb 1);
• Financial strength: According to the annual report (2016), Etisalat has demonstrated extraordinary financial performance in the last five years. Here, the following table gives more information regarding the financial capabilities of the company:

• Rapid Expansion: Etisalat is one of the fastest-growing telecom operators in the global market since the number of customers was only four million in 2006, and this figure suddenly increased to 136 million from 2007 to 2016;
• Technology: As per the annual report of Etisalat Group, the company is committed to provide differentiated products and offer innovative services using the most advanced technological applications;
• Customer relationship management: Understanding the customers appropriately and generating adequately trustworthy relationships are the main objectives of the company;
• Quality: For the last four decades, Etisalat has provided reliable and high-quality services to the customers

Weaknesses

• Operation in the global marketplace: Because of the adverse political and economic scenarios in certain markets, it is often difficult for the company to control the operating costs and to reduce other financial risks (Haseeb 1);
• Others challenges for the company include managing the global operations and internal business environment, ensuring service quality in the overseas markets, expatriates management, and so on

Opportunities

• Business expansion: Etisalat has an opportunity to promote its products and services in some new countries in the Middle East, Africa, and Asia;
• Diversification: According to the yearly reports of the company, Etisalat concentrates on the diversification of its products and services to sustain as a market leader in the telecommunication sector of the UAE;
• Merger and acquisition strategy: Implementation of this strategy will give the company an opportunity to expand the business rapidly in the international market;
• Long experience: Etisalat has the scope to learn from previous mistakes and develop a professional management team to save innocent customers from unexpected troubles

Threats

• Competitors: The strong performance of the competitors is the main threat for this company since competitors like Vodafone, Three Mobile, AT&T, and Telenor have the required financial strength to develop new products and to enhance networking, internet, and telecommunication services for the customers of the UAE;
• Contract with foreign companies: Joint ventures with international market players may cause financial risks. In addition, it may become difficult for Etisalat to ensure the quality and originality of its product line, which can adversely affect the performance of the company

Strategy, Objectives, and Goals

In 2017, Etisalat Group adopted a new strategy of accommodating the core mission and visions of the company, which were based upon the five aspects; these features included operational excellence, portfolio management, the brilliance of offered services, wonderful customer experience, fair treatment towards the employees, and harmonized organizational culture both in foreign and domestic markets. In 2012, the company introduced its corporate-level strategy that aimed to enhance its global market without hampering the steady growth rate in the local market; in doing this, it achieved successful outcomes by rapidly developing its market share in the global telecom industry.

Etisalat has adopted some new strategic goals and objectives, and these are briefly analyzed below:

• Business strategy: Etisalat initiated its business strategy on the basis of brilliant performance, superior quality, and a high degree of collaboration with stakeholders and integration of contemporary HR practices; moreover, it believes that continuous internal improvement is the driver of progress;
• Marketing and sales strategy: This strategy focuses on providing the right product in the right place during the correct time, whilst coordinating with brand loyalty and engaging with the best deals;
• International expansion strategy: This strategy has been organized through a solid structure of good governance to carry out the standards of corporate discipline smartly in the overseas market by appointing tested and trusted employees;
• Digital transformation strategy: Being the pioneer of the 5G network in the local market of the UAE amid the adverse business environment of the modern telecommunication industry, the digital transformation strategy of the company has driven it to collaborate with Dubai Parks and Resorts to generate long-term value for its stakeholders in all spheres;
• Versatile and balanced strategy: The versatile and balanced strategy allows the company to enhance its core services to uphold its leadership in the ICT market by introducing newfangled technologies that make its portfolio smarter than ever; moreover, its customer-centric operations allow it to become the most competitive network infrastructure in the GCC and MENA region;
• Segment-based strategy: Etisalat has aligned the segment-based strategy with its subsidiaries to provide sophisticated services to the ‘high-value’ customer segments rather than the ‘high volume’ customer segments; these helped it to maintain its rate of customer retention;
• Long-term strategy: The long-term strategy has allowed Etisalat to organize the global mega-event called ‘Expo 2020 Dubai’, and it is anticipated that over 25 million visitors from around the world would visit the event and share their digital experiences; Etisalat would use its technological resources and capabilities to handle this complex project within the short time.

Business Strategy

Cost Leadership

In the UAE market, Etisalat Group is the market leader and it has strong customer base outside the domestic market as well; however, the purchasing power of the customers in the target market is comparatively high, for which they are not interested in cheap products – rather they prefer standard and branded items (Etisalat 61). The management of the company concentrates more on the requirements of the customers, the quality of the products, and the incorporation of the latest technologies in their products and services; therefore, it requires large investments to manufacture the products, upgrade the technologies and advance the networks. As the production and the operating expenses are high, it is not feasible for the company to seek the lowest prices for their customers; in addition, cost leadership strategy could limit Etisalat to charge a premium on the products, which may cause financial loss.

Table 10: Decision criteria for strategic alternatives. Source: Self-generated.

Differentiation Strategy

Differentiation of the products will assist the organization to become an innovative operator, which is customer-oriented and willing to deliver value for money; at the same time, the company is committed to offering quality services by meeting public requirements and balancing operating costs; therefore, to bring variations, it offers digital services, for example, eCommerce, M2M, and cloud solutions. According to the study of Abdullah, to rise above the competition, this organization should pursue the differentiation approach to increase the sales volume by balancing the production costs and charging extra premium; however, this strategy will be feasible if the buyers are willing to pay the premium for smart and high-quality digital services (1).

Differentiation and Cost Focus Strategy

Table 12: Differentiation and cost focus strategy. Source: Self-generated.

Implementation – Competitive Advantages of Etisalat

• Performance: Being the leading telecom operator in the UAE, Etisalat began its journey in 1976 with fixed telephony services, and continued to launch new and innovative products to expand its operations outside the country.
• Ownership structure: The government of the UAE holds 60% share of the company, and this plays a vital role in the successful operation of the business since the legal barriers and competitions can be easily minimized, and the policymakers can focus on the reduction of market players to establish a monopoly grasp over the telecom sector;
• Customer base: Because of being the market leader in the telecom industry, the company can easily access the customers and build an enduring relationship with them; according to the annual report of 2016, it has more than 162 million customers in 19 different countries;
• Execution of business objectives: The successful implementation of the short-term and long-term projects even during the challenging external environment is one of the most important competitive advantages of this company;
• Financial growth: As a result of the strong financial and operational performance, Etisalat finds it easy to adopt new strategies, introduce innovative products and services, and update the products at regular intervals – all these activities help the business to boost its overall turnover and facilitate growth over the longer period; for example, the consolidated revenue of this firm grows by 2% every year;
• Network: The aim of this company is to increase its investment in order to provide an excellent network where both fiber-to-the-home (FTTH) and LTE rollout would exceed 92% and 96% coverage of the population; in addition, it introduced the first 3G network in the Middle East and it concentrates on the creation of the best networks in the globe. As a part of this process, in 2011, it began its 4G (LTE) experience for the buyers, and has made an excellent development on the trial sessions of the 5G network in the country to attain amazing growth;
• Committed logistics to meet customers’ demand: It is another great competitive advantage of Etisalat Group to uphold the triumphant supply chain and meet the requirements of the existing and future buyers

Conclusion

From the above discussion, it can be concluded that Etisalat is trying to retain its position as a market leader in the telecom industry of the country; in addition, it is executing different business-level strategies to achieve the organizational goals. This firm operates its business in a suitable external environment since the government of the UAE has enforced several restrictions and legal obligations to decline the number of competitors; in addition, the rivalry between the competitors is comparatively low as well. However, it is trying to pursue the international expansion strategy through a wide range of strategic partnerships and differentiation approach, while concentrating on innovation and quality.

Future Outlook and Recommendations

To continue its uninterrupted growth, Etisalat needs to increase its investments on digital transformations and networks, and advance the Internet and the Clouds as well as customer-oriented differential products to generate long-term value for the stakeholders globally, whilst also welcoming partnership, mergers, or acquisitions. Etisalat has to ensure stronger performance to articulate its strength for the next generation of technological capabilities in the course of its role as a Major Partner of “Dubai Expo 2020” by emphasizing on its innovation and transformational growth. The long-term strategy of the company requires immediate execution of digital educational platform for both teachers and students of the country through joint collaboration with the Ministry of Education; moreover, there is enough space for further digitalization of the health systems, e-governance, entertainment, and trade environment.

Works Cited

Abdullah, Huzaifa. “Strategic Analysis on Etisalat.” huzaifaabdullah. Web.

Etisalat. “Annual Report 2016 of Etisalat.” Etisalat. Web.

Haseeb. “SWOT Analysis of Etisalat.” Marketing dawn. Web.

“Growing Market Saturation in Dubai Telecoms Increasing Competition for High-Quality Content.” Oxford business group, 2017. Web.

Introduction

Research and analysis of the factors that are responsible for the success or failure of any business indicate that good customer service plays an integral part in the success of any business (Goodman 23). Such can be attributed to the fact that the quality of a company’s products or service can be manifested in the quality of service the customers get from the employees of the concerned organization.

Nevertheless, many organizations are yet to embrace customer service as an integral marketing tool. Research has showed that most of the companies that have worst customer service are in the telecommunications industry, with majority of the customers experiencing bad customer services from employees of such companies.

The telecommunications industry requires a lot of capital to make sure that its operations are smooth and effective. In addition, companies in the telecommunications industry are in need of massive client base for them to reach their break-even point. However, having a large customer base can be serving as both a merit and a demerit to the industry in the face of the changing world due to technological advancement.

For example, in the recent years the telecom industry has experienced an increase in the rate of mobile data consumption among its customers because of the introduction of smartphones to the market. With wireless data becoming available, chances are that the consumption rate is likely to rise considerably.

While the industry is recording dramatic increases in consumption of data, and other telecommunication services, no equal dramatic improvement can be noticed in the aspect of telecommunication infrastructure. An upgrade to meet the changing technologies requires a lot of time and capital to be deployed.

As such, many telecommunication customers are experiencing a decline in the quality of services that they get from network and telecommunication providers. Considering the increase in demand for such services, the challenges affecting customer service are likely to increase. This paper thus looks at the importance of customer service and the factors that might lead to poor customer service in an organization.

Therefore, the primary focus is on the case study of Etisalat Telecommunications Company. Etisalat is a telecommunication company that is based in the United Arabs Emirates. It is among the leading network providers and corporations operating in United Arab Emirates. The headquarters of Etisalat are in Abu Dhabi and such a location makes it possible for the company to serve thousands of customers from all parts of the country.

The company has been known for its numerous outlets in the country. In addition, Etisalat has had the opportunity of deploying several, fixed and mobile innovative technologies in different parts of the country. The United Arab Emirates has been known to be a leader in ICT for many years now because of the technologies set up by Etisalat.

Presently, Etisalat has the wildest coverage of fast mobile networks such as the 4G and 3G technology. In addition, the company has set up the FTTH Network (Fibre-To-The-Home), which provides homes in the United Arab Emirates with a very fast network. Even though the company has been experiencing a tremendous growth that has enabled it to transform into a reliable provider of ICT solutions, the Etisalat is losing most of its customers because of poor customer service and high charges on products and services.

Therefore, there was a need for the company to find out the factors that are responsible for its reduced quality of customer service among its employees and the subsequent reduction of customers. For this reason, this study prepared carried out a survey with a representative sample for the study drawn from its employees.

Purpose of the Study

The purpose of the study is to find out the factors responsible for the reduced quality of customer service among employees of Etisalat Company. In addition, the study seeks to find out the reasons behind a reduced number of customers buying products and/or getting services from Etisalat Company.

Research Questions

Research questions in any study are used to guide the study in coming up with the solutions affecting a given organization. It is the duty of the management of any organization to ensure that all the operations of the organization run as expected. The management can come up with research questions that are designed to help eliminating a given problem within the management.

The variability of the solution to the problem at hand is the fundamental factor in deciding the answer to pick. In the case of Etisalat Company, the management was experiencing a reduction in the quality of customer service among its employees, as well as a low turnout of customers.

Solutions to the problem should be in a way that improves the quality of customer service and number of customers that get service from Etisalat Company. Thus, research questions can be considered suitable tools used by management and research to investigate the reasons behind a given scenario within the organization. Among all the situations brought forward, the management chooses the best result.

The best method is the most affordable one and one that takes the shortest amount of time to implement. Research questions give a description of the actions to take in rectifying the problem and the advantages and disadvantages of the choice of actions.

The choice of action should provide solutions to eliminate any future chances of the problem reoccurring and ensuring the best results from the situation. With good research questions, the company will increase the number of people subscribing to their services, as well as improve the quality of customer service among employees.

The study therefore, was based on the following research questions.

1. What are the factors responsible for the reduced quality of customer service among the employees of Etisalat Company?
2. What are the reasons behind the drop in the number of customers in Etisalat Company?
3. What measures can the management take to rectify the situation?

Structure of the Project

The research study will follow a formal structure. In this case, research questions will be used as the basis for the research questions. For this reason, the target All through the project, the primary target will be answering the research questions.

Method of Data Collection

The research will make use of communication study, with interviews and questionnaires being the primary methods of collecting data from the respondents. These methods of data collection will help in getting the necessary answers to the research questions for the project.

Time Dimensions

The passage of time may at times dictate the results of any study. As such, it is suitable to factor in the time dimensions in the overall study results. To deal with influences of passage of time, repetitive studies will offer reliable results.

Topical Scope

The scope of the project will apply the case study approach. As such, drawing on conclusions in this study will be based on the opinions and results from the respondents. The quality of the data will help in developing a lasting solution to the problem of poor customer service and reduced customer turnout in Etisalat Company.

The Participants Perception of the Research

The study will ensure that all the participating employees are briefed on the requirements of the study. Such awareness is necessary before the start of the actual study since it prepares the respondents psychologically and gives them an hint on what is expected of them during the actual study.

The participants taking part in the research will follow their actual routine during the period of the project. The purpose of the study is to understand the issues behind the ductile of the sales in the proper environment without interference with the pattern.

Experimental Effects

Ex-post facto study will be the choice of study in the experimental results. The study will make use of the results from the respondents to draw conclusions on the subject under examination. For this reason, all the analysis will be based on the results obtained from the study.

Customer Service

Customer service refers to any form of help that a customer gets from a given organization. As such, it is the act of an organization providing help in terms of addressing customer’s needs through professional delivery and provision of high quality services that is helpful prior to making any purchases, in the course of the purchases, as well as after satisfying the customer’s need.

The success of any business depends on many things including sound and realistic strategies, outstanding marketing policies, and excellent customer service. Even though many people tend to categorize customer service along with marketing, research and analysis show that customer service plays a significant role in the success of any business. Customer service thus is the concept that takes into consideration customer’s interaction in any business.

As such, customer service can be seen as the image of any organization. According to Goodman (23), a customer is a valuable tool that any organization can use in its advertising. Such can be attributed to the fact that satisfied customer will often come back for more services or products. In addition, a satisfied customer will often refer other customers to an organization whereby they received excellent services.

For this reason, good customer service should be founded on promptness, politeness, professionalism, and personalization. However, many organizations do not take into consideration the value of excellent customer service and the role it plays in the success of any business.

Job Satisfaction

In organizational behavior, the aspect of great interest is the general attitude of employees towards work of job, often referred to as the job satisfaction. As such, job satisfaction is a form of individual feeling, as well as the outlook that a given person has about a job that they are doing. In addition, job satisfaction refers to the perceptions that are likely to affect the level of confidence among employees in terms of the quality of work they are dong.

As such, job satisfaction has an element of single concept whereby, a given individual can be either satisfied with a given job or dissatisfied. Nevertheless, job satisfaction features a combination of particular attitudes towards the given job that are closely linked to several aspects of the concerned job.

Job satisfaction can be measured through the assessment of several factors of a given person’s job: job supervision, promotion, pay, co-workers behavior and the work itself. It is thus evident that a person can be satisfied with one aspect of a given job but be dissatisfied with other aspects of the same job. Job satisfaction and customer service are directly related.

Highly satisfied employees will often work to ensure that they deliver quality services to their customers. Lack of job satisfaction thus translates to poor customer service.

Dilemma in Management

Most of the time, organizations are faced with challenges and scenarios for which they cannot comprehend the causes or the reasons behind such scenarios. Goodman (123) considered such scenarios as management dilemma. As such, the circumstances that cause management dilemma in an organization are equally responsible for cases of reduced productivity, low performance, and reduced number of sales, and decrease in profit margins.

Usually, in any organization, the management plays the role of making sure that the operations of the organization are smooth, and that all policies are geared towards realizing the goals and objectives set by the organization. However, whenever a given company experiences management dilemma, it is likely that there will be adverse effects on one or many aspects of the organization’s strategies.

Such a scenario thus has negative effects in the overall production of the concerned organization in aspects of production, performance, and profit generation. Research and analysis show that several factors such as environmental factors are responsible for any challenges that an organization may face.

Considering the changing needs of customers and employees, it is likely that there are numerous demands that employees of any given organization have. Some of these demands are critical in that they play a significant role in determining the overall level of job satisfaction among the employees. For this reason, it would appear that meeting the demands of employees of any organization would have a direct impact on the performance of employees and the general productivity of the concerned organization.

In the case of Etisalat Company, there was concern over the reason behind the increased reports of poor customer service among the company’s employees. Customer service was initially used in this company as a tool to woo back existing customers as well as to attract new customers to subscribe to some of the services provided by Etisalat Telecommunications Company.

In the global age, many businesses are using online strategies to manage their client base. As such, as opposed to traditional approaches organizations can rely on leads generation and referrals to make sales. However, increasing the sales volume is only possible if the given organization is in a position to maintain its existing customers, as well as attract new ones.

Usually, companies are likely to have repeat customers from happy and satisfied customers. In addition, such customers will often recommend their friends and family members to organizations where they received quality services. On the other hand, if the services of any given organization are poor and of low quality, the organization is has a high chance of losing both existing and prospective customers.

For this reason, organizations nowadays are embracing the power of good customer service as a marketing tool. The advent of technology and computers has provided many platforms that organizations can use to engage with their clients. Some of these platforms include emails and websites, where customers can make enquiries on particular services and products or even seek help about a given product of service.

Management Questions

It is the duty of the management in any organization to set up measures that are needed to solve an existing management dilemma within the organization. As such, the management should brainstorm on areas that are likely cause of the management dilemma in order to eliminate it efficiently. Usually, such attempts are aimed at increasing the chances of achieving the organization’s goals, and increasing its profit margin.

For this reason, solving any problem in an organization requires the management to explore various areas to pinpoint the cause of the problem. For this reason, the management ought to apply the necessary policies to enhance the productivity of the business. Management dilemma in any organization serves as a force that pushes the organization to apply diverse policies to rectify the concerned situation of the organization.

Therefore, management questions examines any possible opportunities that once exploited can increase the productivity and performance of any given organization. In the case of Etisalat Company, the management question was based on measures that the company can adopt to improve customer service among its employees as a way of retaining its existing customers, as well as attracting new ones.

The systematic planning of actions that are applied in the collection of information and subsequent analysis of data in a logical manner that help in realization of the purpose of any given study is called the study design (Creswell 29). Examples of the study designs include descriptive, cross-sectional, experimental, and explorative researches.

Research methodology refers to the principles and processes that are applied to collect data that can be utilized in decision making, in business and/or social setting. This section of the paper will therefore concentrate on the research methodologies and design to be used in the research.

Research Designs

The research on factors responsible for low customer turnout and reduced customer service among the employees of Etisalat will focus on what has been achieved and the constraints faced by the customers and perhaps the employees in this company. The necessary information will be obtained through a survey and interviews on the employees of Etisalat Company.

The research will be comprehensive and combination of two study designs will be applied, they include descriptive and cross sectional. The descriptive research design will apply to this study, as it is very crucial in assisting to provide answers relating to how research problem has affected a given societal situation.

For instance, in gauging the effectiveness of the customer service on customers’ purchasing power, there will be a need to describe the tangible effects so far and reasons behind the effects. In many occasions, the descriptive study is applied as a precursor for a quantitative. The descriptive study also gives indexes to the variables that need to be examined.

In addition, the descriptive study leads to reliable data from which inferences and recommendations can be drawn. The research on Etisalat Company in United Arabs Emirates will cover a small geographical area. Representative data will be necessary if the results are to be reliable and valid. Descriptive studies are appropriate in collection of reliable amount of data.

However, there are obvious shortcomings of the descriptive study; for instance, the study is mainly depended on instrumentation of measurements and observation. There is thus need for a study design that will complement the descriptive study and ensure that quantitative data is obtained.

Target Population

Target population involves the entire people or units of which the study intends to collect information from and draw inferences. According to Creswell (29), the target population depends on the phenomenon to be studied and the data that is desired. The research will target the employees of Etisalat Company in the United Arab Emirates.

Sampling Design

A sample is a subsection of the target population. To arrive at a sample size, proper sampling techniques should be applied. A sample should be a representative of the target population. Sampling design comprises of the sampling frame, sampling techniques and sample size.

Sample

A sample is usually drawn from the target population. Sampling frame represents the working population that is to be utilized in the study (Denzin and Lincoln 20). According to Denzin and Lincoln (18) if a sample frame is taken correctly it will lead to a sample that can be used for the population as a whole. As such, the study will interview only three employees of Etisalat, and the results from the respondents will be used to represent the situation and opinions of all employees in this company.

Sampling Techniques

The sampling technique to be applied is the simple random sampling procedure. This method will allow the research to be very inclusive, bearing in mind that the study aims at collecting reliable data about poor customer service and the reduced customer turnout in Etisalat Company.

The random sampling will give all the employees in the sample frame an equal chance of being represented in the sample. Simple random sampling is very effective in getting a representative sample from a large sample group. The sample frame has many employees and all the employees should be given an opportunity to be included irrespective of the region, thus the simple random will be appropriate.

Creswell (29) noted that the simple random sampling technique is free from human bias and avoids the classification errors, by giving each unit an equal chance of being selected. If correctly administered, the technique leads to highly representative sample population.

In addition to the simple random technique, a purposive sampling will be applied in the identification of the people to be interviewed. The purposive sampling depends on judgment of the researcher in the selection of the people to be included in the study. The purpose behind this sampling technique is to focus on particular aspect of the unit/population that will provide the answers to the research questions.

According to Creswell (29), purposive sampling is advantageous when specific information is required from specific people. In such a case, specific information will be required from the employees. A stratified purposeful sampling, which will target the groups of interest, will be applied. The combination of the simple random and purposeful sampling is expected to give comprehensive data for the research.

Sample Size

The determination of the sample size is depended on the number of replication that can be applied in drawing inferences about the population/units. The type of data required for the research normally determines the sample size. Sample sizes are important in determining precision of the research (Denzin and Lincoln 18).

In a research, a sample size can be small or large; the researchers, resources available and the purpose of the research again dictate the sample size. This research by application of the random sampling will have a sample size of three employees.

Data Collection Methods

The research is aimed at determining the reasons behind the low turnout of customers in Etisalat Company and the subsequent reduced quality in customer service among the employees of this company. To find out the complexities that may be affecting the quality of customer service and reduction in number of customers’ subscription, there are study questions that will guide the research.

As a result, the type of data collection that will ensure that comprehensive data is gathered will be applied. According to Denzin and Lincoln (20), the method of data collection is normally influenced by the research strategies, the point of collection, and the person to carry out the research. The main types of data collection methods to be used in the study will include secondary sources of data collection.

Design of the surveys

The study adopted a causal explanatory format with the primary objective being to find out the factors that are responsible for reduced quality of customer service among the employees of Etisalat Company, and the subsequent reduction in customer in the company. The results from the study will help in answering the research questions and thus provide a lasting solution to the problem bad customer service and the subsequent low turnout of customers.

A purposive qualitative design will be employed in the study. In addition, the study will employ a small sample size considering that the primary aim of the study is on quality as opposed to a large sample size. For this reason, three individuals will be interviewed whereby they will be required to answer a list of five questions.

Interviews are good research instruments that can be applied in collection of information in order to gain insights into attitudes and perceptions. They also serve to explore personal differences, experiences, and outcomes. The interviews will be guided interviews, as they will probe to get specific information from the respondents.

The three individuals will comprise employees of Etisalat Company since the employees have a direct contact with the customers. For this reason, the employees have a high chance of influencing the purchasing power of customers based on how best they handle the customers.

Along with the personal interview, the study will also make use of self-administered survey to collect more data on the company’s problem. The self-administered survey will have 20 questions, which will be designed to suit a qualitative approach.

The Actual Survey

The actual survey will have the following questions that will guide the respondents in providing the necessary information regarding the quality of customer service among the employees, and the reduction in the turnout of customers in the company.

1. What are the factors responsible for the reduced quality of customer service among the employees of Etisalat Company?
2. What are the reasons behind the drop in the number of customers in Etisalat Company?
3. What measures can the management take to rectify the situation

Self-Administered Survey

1. What are the factors responsible for the reduced quality of customer service among the employees of Etisalat Company?
2. What are the reasons behind the drop in the number of customers in Etisalat Company?
3. What measures can the management take to improve customer service among employees?
4. What measures can the management take to increase the rate of customer turnout?
5. Which advertising methods can work for increasing the customer turnout in Etisalat Company?
6. Can reduction of the charges on services and products make a significant change?
7. How can the management deal with the competition aspect in ensuring the restoration of sales?
8. Can the improvement on the design of the service card meet the market expectations?
9. Did the research conclusively review the course and cause of the drop in sales of the service cards?
10. Were the measures taken by management sufficient in rectifying the issue of poor quality of customer service?
11. Was there sufficient promotion of the products and services offered by the company?
12. Can increase in employee satisfaction and the subsequent employee training and development make a significant impact?
13. Can the recruitment of new employees bring a change in the quality of customer service?
14. How did motivation of employees improve the quality of customer service?
15. Can the reduction of cost of the products and services be a viable option in promoting the company?
16. What are the benefits of a technological advancement pertaining to the quality of customer service?
17. Did management employ the best measures in rectifying the customer service issue?
18. Did the research employ adequate measures in the survey of the reasons for the reduced customer turnout?
19. Did measures taken by management solve the impending problem?
20. Are the solutions long lasting and implementable?

Survey Questions for the Three Respondents

Part 1

Were the measures taken to resolve the problem viable?

1. Yes
2. No
3. Not sure

Are the reasons behind the drop in the number of customers in Etisalat Company applicable?

1. Yes
2. No
3. Not sure

Are the measures taken by the management to improve customer service among employees viable?

1. Yes
2. No
3. Not sure

Did the measures the management take to increase the rate of customer turnout make any significant change to the situation?

1. Yes
2. No
3. Not sure

Did advertising increase the customer turnout in Etisalat Company?

1. Yes
2. No
3. Not sure

Part 2

Can reduction of the charges on services and products make a significant change?

1. Yes
2. No
3. Not sure

Can the management deal with the competition aspect by improving the quality of customer service?

1. Yes
2. No
3. Not sure

Can the improvement on the quality of customer service and the reduction in prices meet the market expectations?

1. Yes
2. No
3. Not sure

Did the research conclusively review the course and cause of problem?

1. Yes
2. No
3. Not sure

Were the measures taken by management sufficient in rectifying the issue of poor quality of customer service?

1. Yes
2. No
3. Not sure

Part 3

Was there sufficient promotion of the products and services offered by the company?

1. Yes
2. No
3. Not sure

Can increase in employee satisfaction and the subsequent employee training and development make a significant impact?

1. Yes
2. No
3. Not sure

Can the recruitment of new employees bring a change in the quality of customer service?

1. Yes
2. No
3. Not sure

Can the motivation of employees improve the quality of customer service?

1. Yes
2. No
3. Not sure

Can the reduction of cost of the products and services be a viable option in promoting the company?

1. Yes
2. No
3. Not sure

Are there any benefits of a technological advancement in improving the quality of customer service?

1. Yes
2. No
3. Not sure

Did management employ the best measures in rectifying the customer service issue?

1. Yes
2. No
3. Not sure

Did the research employ adequate measures in the survey of the reasons for the reduced customer turnout?

1. Yes
2. No
3. Not sure

Did measures taken by management solve the impending problem?

1. Yes
2. No
3. Not sure

Are the solutions long lasting and implementable?

1. Yes
2. No
3. Not sure

Results of the survey

What are the factors responsible for the reduced quality of customer service among the employees of Etisalat Company?

What are the reasons behind the drop in the number of customers in Etisalat Company?

What measures can the management take to improve customer service among employees?

What measures can the management take to increase the rate of customer turnout?

Responses from the three respondents on the survey questions were recorded as follows.

Were the measures taken to resolve the problem viable?

Are the reasons behind the drop in the number of customers in Etisalat Company applicable?

Are the measures taken by the management to improve customer service among employees viable?

Did the measures the management take to increase the rate of customer turnout make any significant change to the situation?

Did advertising increase the customer turnout in Etisalat Company?

Can reduction of the charges on services and products make a significant change?

Can the management deal with the competition aspect by improving the quality of customer service?

Can the improvement on the quality of customer service and the reduction in prices meet the market expectations?

Did the research conclusively review the course and cause of the problem?

Were the measures taken by management sufficient in rectifying the issue of poor quality of customer service?

Was there sufficient promotion of the products and services offered by the company?

Can increase in employee satisfaction and the subsequent employee training and development make a significant impact?

Can the recruitment of new employees bring a change in the quality of customer service?

Can the motivation of employees improve the quality of customer service?

Can the reduction of cost of the products and services be a viable option in promoting the company?

Are there any benefits of a technological advancement in improving the quality of customer service?

Did management employ the best measures in rectifying the customer service issue?

Did the research employ adequate measures in the survey of the reasons for the reduced customer turnout?

Did measures taken by management solve the impending problem?

Are the solutions long lasting and implementable?

Conclusion

The findings from the study showed that, 66.67% of the respondents cited lack of employee motivation as the major factors responsible for bad customer service. The rest of the respondents (33.33%) agreed that lack of employee plays a significant role in bad customer service among the employees.

However, as far as the reduction in the number of customers subscribing services from Etisalat was concerned, the respondents blamed the situation on poor customer service, expensive products and services, as well as stiff competition from other providers. For this reason, the findings indicated that enhancing employee motivation, training, and development could help increase the level of employee job satisfaction, which would in turn influence the quality of customer service among employees of Etisalat Company.

In addition, it was evident that for the company to restore its image and recover the lost customers it was required to improve customer service by ensuring high degree of employee satisfaction, invest in promotion and advertisement, as well as reduce the prices on its products and services.

There was also the need to promote the products and services of the company as a way of wooing back customers considering that the company would reduce its prices. IN Addition to the above strategies, adopting the use of technology would help a lot in the general operations of the company. Majority of the respondents felt that such measures were long lasting and amendable.

From the findings of the study, it was evident that the needs of both customers and employees are very important for any given business to succeed (Goodman 23). It was also evident that the quality of customer service is tied to the level of employees’ job satisfaction. As such, if the employees are not satisfied with the work they do, perhaps due to lack of motivation, they will not be in a position to offer the best to the customers.

The drop in the number of customers at Etisalat due to bad customer service was enough proof that customer service is very significant in any business. For this reason, Etisalat should maintained high satisfied and trained employees, uphold quality customer service, and charge considerable prices for its products and services. Such approaches will help the company to maintain a large market share and wide customer base.

Works Cited

Creswell, John. Research Design. Thousand Oaks, California: SAGE Publications, 2014. Print.

Denzin, Norman, and Yvonna Lincoln. The Sage Handbook of Qualitative Research. Thousand Oaks: Sage, 2011. Print.

Goodman, John A. Strategic Customer Service. New York: AMACOM, 2009. Print.

Introduction

Business innovation is an evidence-based strategy that allows companies to modify their models and support the demands of their clients. Etisalat Group is presently one of the leading telecommunication corporations in the world today. It provides high-quality services, opportunities, and solutions to millions of customers in Asia, the Middle East, and Africa. The adoption of innovation at Etisalat is a strategy that has transformed the level of operations, improved business performance, and maximized the recorded profits. This paper describes the nature of this organizational change process and the major issues that future investors should take into consideration.

Innovative Strategies

Etisalat has been in operation for the past four decades. The leaders at this corporation have been focusing on emerging trends and strategies that resonate with the expectations of the targeted customers. The nature of digitalization experienced in the world today has compelled companies to transform their models. More customers in the Middle East and across the globe have been in need of superior solutions, smartphones, and high-speed connections to meet their demands (Sandle, 2019). The integration experienced across different industries is dictating the nature of this process. Etisalat has capitalized on these technological developments and demands to develop new innovations that can deliver additional gains.

Several years ago, Etisalat introduced a new strategy that has been intended to maximize innovation and empower the identified clients. The company identifies such an initiative as TARGET. This is an acronym capturing the organization’s sense of direction, goals, and ambitions. T means to drive digital technology to support societies (Sharma, 2019). A represents the acceleration of value growth through continuous innovation while R entails raising abilities and talent across the organization (Etisalat Group, n.d.). G denotes the growth for B2B arrangements across the digital footprint. E means to expand such a portfolio across the MENA region while T explains how the company intends to transform the experiences of all partners.

Following the successful launch and implementation of the TARGET initiative, Etisalat Group has become one of the most competitive corporations in the wider Middle East region. The project revolves around the use of 5G technology and supportive features. The company has been conducting research and development (R&D) to identify some of the best measures to merge all sectors through continuous innovation (Venkatesh et al., 2019). The involvement of key stakeholders and clients creates a sense of trust, thereby allowing more individuals to be part of the agenda.

This company has partnered with banking, telecommunication, financial, health, and insurance firms across the region to ensure that more customers receive timely services. These efforts have led to sustainable solutions while allowing more individuals to achieve their maximum potential. The involvement of skilled people and leaders has made innovation a priority as the corporation strives to achieve its mission and vision (Sharma, 2019). The established partnerships have supported the B2B model thereby delivering additional gains. The manner in which this company pursues its innovative strategies means that it will achieve its goals much faster and become more successful in its industry.

Impact on Stakeholders

The guiding principle dictating the digital transformations and innovative tendencies at Etisalat Group is the desire to empower all key stakeholders. The company has been striving to transform its business model while focusing on the emerging demands of its key partners. Consequently, the leaders have succeeded in transforming the experiences and outcomes of different stakeholders. Some of the notable ones include Etisalat’s customers, employees, health institutions, government agencies, communities, financial institutions, and emerging businesses (Venkatesh et al., 2019). The company relies on recorded lessons and observations to make better decisions and pursue R&D in an informed manner.

First, the ultimate aim of any business is to maximize the experiences of the customer in accordance with the stakeholder theory. This model allows companies to engage in activities and practices that resonate with the demands of the clients. At Etisalat, innovation is usually introduced to ensure that the experience of the customer is improved continuously (Venkatesh et al., 2019). For instance, the latest 5G technology is providing a faster browsing experience while improving clarity. The users have been able to complete numerous tasks, perform their duties much, faster, and support the performance of their respective businesses.

Second, the organizational theory focuses on some of the best ideas and practices that can promote the best structure and culture. Businesses relying on such models will maximize the experiences of their workers and provide the relevant resources. At Etisalat, the employees rely on some of the emerging innovations to complete their duties while serving their customers much better. The managers at the company have also considered the importance of good working environments and resources that echo the targeted innovations (Etisalat Group, n.d.). The increasing number of satisfied employees has led to the provision of timely and superior technological and communication services.

Third, business theories guide corporations to develop sustainable relationships with their partners and attract new ones to achieve their goals. At Etisalat, a B2B model exists whereby it designs platforms and digital solutions that resonate with the demands of more clients in the banking and insurance industries. The digital solutions available to most of these customers are allowing Etisalat to attract more business clients (Sandle, 2019). Consequently, such stakeholders are finding it easier to serve their customers using online-based technologies and systems. These satisfied partners indicate clearly that Etisalat is capable of recording additional gains and profits.

Fourth, Etisalat Group has been focusing on the implemented policy guidelines to produce superior products and services that are capable of improving user experience. The government has guided its agencies to integrate such technologies to support and improve the available public services (Etisalat Group, n.d.). These gains reveal that most citizens are satisfied with most of the available resources and funds. Such developments explain why there is a need for the leaders in this country to support the innovation model. The managers can also consider additional insights to support the agenda and meet the demands of the greatest number of citizens.

Finally, medical facilities and learning institutions across the MENA region are keen to adopt emerging innovations. Such technologies are intended to support the delivery of personalized services. The introduced 5G network and apps are capable of guiding hospitals to collect and share information in a secure and fast manner. Similarly, most of the modern technologies different institutions of learning implement are capable of supporting the delivery of the relevant instructions (Sharma, 2019). From this analysis, it is agreeable that the managers at Etisalat Group should consider some of these positive impacts and improve the current innovative tendencies.

Complex Factors

Organizations intended to adopt modern technologies ad innovations tend to encounter a wide range of highly complex factors. The first one is that some of the workers remained reluctant and resisted the intended process. This challenge will make it impossible for the leaders to guide the process and introduce systems that resonate with the demands of the customers (Sharma, 2019). The second factor is the need for numerous resources and tools. At Etisalat, the innovation process has been successful since it has the required funds to support the entire process.

The changing nature of technology can become the third issue that stakeholders need to take seriously. Some companies might pursue a specific innovation but realize that it has become obsolete before launching it successfully. Such a realization could result in additional challenges and increase the company’s chances of becoming less profitable. Additionally, the entire process is quite demanding since investors will have to consider the needs and views of all key stakeholders (Sharma, 2019). This trend explains why customization is an experience and critical aspect of any form of innovation. Without the consideration of this high factor, more firms planning to pursue their technological goals will fail significantly.

The success recorded at Etisalat due to the introduced innovation processes is a clear indication that any company can achieve its goals much faster. However, this organization has encountered some of the challenges outlined above, thereby being unable to record maximum gains. The acquired lessons can become the best ideas for addressing such gaps and presenting better approaches to maximize innovation (Tuxford, 2018). The implementation of proper strategies and approaches can result in improved sustainability and make the tendency more effective.

At Etisalat Group, the use of a proper change theory to support any innovative agenda can deliver desirable results much faster. This approach can address the possible level of resistance, encourage more professionals to be part of the process, and be aware of the anticipated goals. The leaders need to consider such an approach in the future in an effort to record positive gains in a timely manner. The company can study a wide range of case studies in different sectors and countries in the future whenever introducing new innovations (Sandle, 2019). For instance, many corporations in Asia and Europe have succeeded in taking the idea of innovation to the next level. These insights can make it possible for Etisalat and other organizations to achieve greater gains within a short period.

The identified complex factors explain why the idea of collaboration among the key stakeholders and interested businesses is critical. Such a model will support the introduction of superior technologies and innovations that resonate with all participants’ demands. The company can find it easier to present superior innovations that can solve problems in different sectors or support the delivery of timely results (Tuxford, 2018). The concept of continuous improvement is also critical since technology remains ever-changing. Such an approach will make more companies sustainable and profitable in their respective regions.

Conclusion

The above discussion has identified Etisalat Group as a company whose success and profitability are attributable to its innovative tendencies. The organization’s efforts have transformed the experiences of all key stakeholders and partners in a positive manner. However, these gains have been recorded amidst various challenges that affect many organizations. Some of the outlined recommendations are evidence-based and capable of guiding more leaders to implement innovative tendencies more efficiently. These initiatives will deliver sustainable results in a timely manner and meet the demands of more stakeholders.

References

Etisalat Group. (n.d.). Our strategy.

Sandle, T. (2019). UAE’s Etisalat telecom selects four tech firms for innovation. Digital Journal.

Sharma, A. (2019). Etisalat to build 5G infrastructure for all UAE customers in 2019. The National News.

Tuxford, K. (2018). Case study: How Etisalat has nurtured highly engaged employees. CIPD.

Venkatesh, R., Singhal, T. K., & Mathew, L. (2019). Emergence of digital services innovation as a path to business transformation: Case of communication services providers in GCC region. International Journal of Innovative Technology and Exploring Engineering, 8(6C), 56-63.

Etisalat is the largest provider of telecommunication services in the UAE. It is a part of Etisalat Group that operates in numerous countries of Asia, the Middle East and Africa (“Company Profile” par. 1). The company has more than eleven million residential customers and more than 300, 000 enterprises of different sizes and government clients (“Company Profile” par. 3). Currently, the company covers 86.4 percent of the country’s area with Fiber-To-The-Home (FTTH) network (“Company Profile” par. 3). Therefore, the UAE is a leading country in the world in terms of a fiber connection. Moreover, Etisalat “has the widest coverage of 3G and 4G mobile technologies in the country” (“Company Profile” par. 3).

According to the last company’s annual report it had revenue of AED 51,73 billion in 2015 which is significantly higher than AED 48, 50 billion it consolidated in 2014 (“Annual Report 2015” par. 3). Therefore, it could be argued that Etisalat has a fairly successful approach to organizational management that helps it to gain competitive advantage and maximize functional performance. The aim of this paper is to explore the company’s organizational structure in terms of the hierarchy of authority. It will also discuss Etisalat’s activities at divisional and functional levels. The final section of the paper will review the company’s customer support efforts at different dimensions of its operation.

Hierarchy of Authority

The company is a part of Etisalat Group corporation that is headquartered in Abu Dhabi, UAE (“Company Profile” par. 1). Etisalat’s board of directors consists of eleven members who have been elected to represent interests of the stockholders of the corporation. They are responsible for developing management-related policies that help to ensure that the organization achieves its strategic business objectives. In addition to performing fiduciary duty, the board of directors is also responsible for ensuring that company succeeds in benefiting their customers through superior services. The board of directors is chaired by Eissa Mohamed Ghanem Al Suwaidi and has “all the power required to carry out Company’s business as mandated in its objects” (“Corporate Governance” par. 4).

Seven members of the board have been appointed, and other four have been elected by shareholders owning 40 percent of Etisalat’s shares (“Corporate Governance” par. 4). The company has established three committees that help to discharge some of the responsibilities of the board of directors: Audit Committee, Nomination and Remuneration Committee, and Investment and Finance Committee. Audit Committee is responsible for performing the following tasks: verifying the company’s financial statements, monitoring the company’s adherence to the laws and regulations, and contracting external auditors among others (“Corporate Governance” par. 5).

Nomination and Remuneration Committee has been created in order to perform some of the management functions of the board of directors. Specifically, it is responsible for ensuring that all board members are independent. Moreover, the committee monitors the actions of the board in order to guarantee that it complies with the discipline standards and the rules of governance (“Corporate Governance” par. 5).

Another function of Nomination and Remuneration Committee is to develop policies “for granting remunerations, incentives, and salaries” to the board (“Corporate Governance” par. 6). Investment and Finance Committee was established in 2009 (“Corporate Governance” par. 6).

It manages tasks related to internal and external investments of Etisalat. The team of the company’s top managers includes the following members: Hatem Dowidar (Acting Chief Executive Officer, Etisalat Group), Saleh Al Abdooli (Chief Executive Officer, Etisalat UAE), Serkan Okandan (Chief Financial Officer, Etisalat Group), Abdulaziz Al Sawaleh (Chief Human Resources Officer, Etisalat Group), Khalifa Al Shamsi (Chief Digital Services Officer, Etisalat Group), Hazem Metwally (Chief Executive Officer, Etisalat Group), Obaid Bokisha (Chief Procurement Officer, Etisalat Group), Javier Garcia (Chief Internal Auditor, Etisalat Group), Dr. Kamal Shehadi (Chief Legal and Regulatory Officer, Etisalat Group), John Wilkes (Chief Internal Control Officer, Etisalat Group) (“Management Team” par. 1). Appendix A shows the organizational structure of Etisalat.

Divisional and Functional Management Activities

The company’s functional activities are coordinated by the top level of management (Surbhi par. 4). Etisalat has been divided into numerous functional units that help to ensure a higher level of control of the company’s activities and a greater degree of specialization. Due to the complicated nature of the company’s operations, its activities have been divided into both divisional and functional levels. Numerous divisions such as Finance, Corporate Strategy and Business, Commercial Division, and Human Resources Division among others have been created. They are supervised by the general managers who control overall business activities. This type of structure allows the company’s CEO Saleh Al Abdooli to have better control over operations of each division (“Management Team” par. 1).

Independent departments at the functional level are separated by the activities and functions they perform. It provides them with a higher level of autonomy thereby stimulating better performance. Activities of all departments are controlled by department managers who are experts in their respective fields (Surbhi par. 4). The department managers are responsible for the performance of their departments and have to report to the top management of Etisalat.

Customer Support

According to the Director General of Telecommunications Regulatory Authority (TRA), a recent annual benchmarking survey of Etisalat proves that the company is committed to continuous improvement of its telecommunication services (“TRA Discusses” par. 1). Etisalat’s customer support efforts at different levels of its operation have been recognized by Trace Media. In 2014, the company won TeknoTel Award for ‘Best Customer Care 2014’ (“Etisalat Bags” par. 1).

According to the Vice President of Customer Experience Hassan Hussain, in order to ensure the high quality of customer support, the company has hired over 2000 professionals that “work around the clock and handle millions of calls per month” (“Etisalat Bags” par. 5). The company’s toll-free line provides callers with information on special offers, allows them to make quick subscriptions, register complaints, and obtain general information on mobile, TV, and Internet services (“Etisalat Toll Free” par. 2). Etisalat regularly increases the number of customer support languages in order to provide a better quality of customer support for its ever-increasing customer base. Moreover, the company has launched a mobile app called Etisalat UAE. It allows its customers to enjoy numerous services such as mobile account tracking, parking, and bill payments (“Etisalat Bags” par. 9). Furthermore, it provides clients with an option of instant subscription to different services and bundles.

Conclusion

The analysis of the company’s organizational structure in terms of the hierarchy of authority, as well as its activities, at divisional and functional levels has revealed that Etisalat is an extremely effective company. Its success stems from the implementation of proper operational strategies that have helped the company to increase its customer base and become the largest provider of telecommunication services in the UAE. Moreover, superior quality of the customer service that is provided by thousands of trained professionals helps Etisalat to ensure that it caters to its clients’ needs in the most efficient manner.

Works Cited

“Annual Report 2015.” Etisalat. Web.

“Company Profile.” Etisalat. Web.

“Corporate Governance.” Etisalat. Web.

“Etisalat Bags Best Customer Care Award.” Etisalat. Web.

“Etisalat Toll Free 101 Service to Handle All Customer Care Requirements.” UAEinteract. Web.

“Management Team.” Etisalat. Web.

“TRA Discusses with Etisalat and Du the Results of Annual Benchmarking of Mobile Services & Networks Quality in UAE.” TRA. Web.

Surbhi, Sam.“Difference Between Functional and Divisional Structure.” Key Differences. Web.

Appendix A: The Organizational Structure of Etisalat

Executive Summary

Two companies, viz. the Etisalat and the Du, serve the UAE’s telecommunication industry. Etisalat has enjoyed a monopoly market since 1976. Du was launched in 2007, and this move has caused a steep subscriber drop for Etisalat. This paper examines the marketing strategies employed by the two companies in the UAE.

The method used entails studying the information available in the magazines, promotional materials, website contents, and later interviewing customers randomly. The research has found that the two companies make strategies to beat each other. These strategies have been discussed in detail in this paper.

The research has also found out that the objective of Etisalat in the market is to offer quality services while that of Du is to offer affordable services. Consequently, Du has low-priced products, and Etisalat does not reduce its prices as a competing strategy. Despite Du having lower prices, Etisalat remains the largest market shareholder in the industry.

Introduction

Only two telecommunications companies operate in the United Arab Emirates (UAE). The companies are the Etisalat and the Du. Etisalat enjoyed a monopoly in the telecommunication industry until Du launched its operation in early 2007.

Nevertheless, Etisalat, which enjoys a market share of 80%, is the largest telecom in the UAE. Worldwide, Etisalat is the sixteenth largest telecommunications company. Mobile phone users in the UAE increased by a rate of 25.6 % every year, which beats the population growth of the country by four times (Business Monitor International, 2011).

The competition between the two rival telecoms, viz. Etisalat and Du are seen through their increasing market share convergence. For instance, Du has expanded its market share from 2.4% to over 40% within four years. According to its CEO, the company intends to increase its mobile market share to exceed 50% within two to three years.

The telecommunication sector in the UAE expects more segmentation in the future. The CEO further states that the domestic telecoms sector is expected to register the setup of new firms engaged in areas of digital services, digital content, and value-added services.

The two telecoms shape their products and services to attract a large number of expatriates in the UAE. All the two operators have products targeting the residents with families and friends living abroad. These products are in the form of promotions based on international calling rates and messaging (Business Monitor International, 2011).

The promotions may focus on religious festivals of certain groups or their traditional holidays. A good example is the Eid al-Adha festive season in November when the telecom operators reduce their rates (Kovacs, 2014). However, the two operators have permanent offers that allow subscribers to enjoy discounts on call rates to selected numbers. This feature includes both national and international options.

These services have emerged due to an earlier decision by the Telecommunication Authority (TRA) to ease previous regulations. It is now easier for the operators to change their rates so that they compete with one another more effectively. Surprisingly, this increasing competition has not caused prices to fall, unlike in other mobile markets. However, the case of the UAE could be due to the limited level of competition in the mobile market.

Since the two players are avoiding price wars, they concentrate on promotions and developing new services to attract customers. Therefore, it can be seen that the mobile market in the country is expanding. With the evolution of technology, novel products are emerging in the UAE markets.

Telecommunication services are very important, and much demanded in the UAE. Due to this demand, the two companies are moving fast to develop new products that attract more customers. In addition, they are developing marketing strategies that could push their products through this steep competition, and thus expand their market coverage. This paper explores the marketing strategies of Etisalat and Du telecom companies in the UAE.

Literature Review

Du versus Etisalat

The Emirates Telecom Company (Etisalat) started in the year 1976. It has been dominating the entire UAE telecommunications market as a monopoly until 2005 when this market dominance was broken as the TRA approved another company, viz. Du, in the industry. According to Business Monitor International (2011), the stakeholders of Etisalat entail the UAE government (60%) and the Emirati citizens (40%).

When Du entered the market, Etisalat officially changed its corporate logo. After changing the brand identities, Etisalat adopted a new approach due to the pressure from the new market entrant. The new approach adopted by the monopolist had a different vision and direction of creating public awareness. In addition, the entrance of the competitor saw the monopolist upgrade its customer care by adding a toll-free customer care line.

Du uses an outstanding strategy, which differentiates it from Etisalat. It offers “many choices to the customers and creates a difference in quality, innovation, and pricing of its products and services” (Hamid, 2013, par. 5). The rate at which the Du’s market share has increased from 2% to 40% within four years proves that it has been the customers’ preferred selection in the UAE market. The company’s strategy embraces cultural diversity, and thus its staff members are from more than 60 countries.

The company appreciates the “prosperous cultural diversity of the UAE and serves customers from a variety of languages and in a move to support the Emiratization movement in the UAE, more than 50% of its top management, and customer care staff are UAE nationals” (Hamid, 2013, pa. 7).

Du’s strategy focuses on offering a variety of high quality and cost-effective products and services. This element is the weakness of Etisalat, which has never revised its prices and strategies for a long time. These innovative and customer-centered strategies are enabling Du to attract more customers progressively.

Subscriber Dynamics

In 2011, Etisalat reported that its mobile subscriber base was 7.4 million users. However, the data from the TRA sources showed that the company had 6.463million subscribers at the end of 2011 (Kovacs, 2014). This aspect indicated that the company had suffered a reduction in subscribers for a second consecutive year.

Market data indicates that in 2010, up to 169,000 subscribers stopped using Etisalat, while in 2011, another 130,000 subscribers dropped the company’s services (Kovacs, 2014). The general slowdown experienced by Etisalat indicates a high mobile penetration rate in the UAE. In addition, it signifies intense competition from the competitor, viz. Du. This steep competition is having a considerable effect on the monopolist’s subscriber growth.

Due to this slow growth in recent years, the market share of Etisalat has continued to contract. According to the TRA figures, by the end of 2011, the monopolist’s market share had fallen to 58.4%, which was significantly down from 64.4% a year earlier (Business Monitor International, 2011). In 2010, the subscriber base of Du reached its record 4 million after hitting 4.333 million.

In 2011, Du experienced more growth through the addition of 271,000 subscribers, which translated into 6.3% growth. After this addition, its subscriber base stood at 4.604 million (Business Monitor International, 2011). This robust growth in subscriber base has resulted in the expansion of its market share from 9.3% in 2007 to 41.6% at the end of 2011.

In general, Du has been reporting higher subscriber additions as compared to Etisalat. It can be assumed that the new subscribers for Du have migrated from Etisalat, given that it is experiencing loss in the customer base. This market dynamic could change if the Virgin Group of UK launches its Mobile Virtual Network Operator (MVNO). In 2010, the group identified the UAE as a key market that it would target (Business Monitor International, 2011).

Subscriber Mix and ARPU

Like the majority of the markets in the Middle East, the UAE has a high number of prepaid subscribers. This aspect is attributed to the fact that Middle Eastern phone users change their mobile handsets frequently up to more than three times in a year. Consequently, the prospect of committing to a long-term agreement on a single handset becomes unattractive to the majority of the users.

The number of postpaid subscribers hit the one million mark at the end of 2010, which constituted about 9.8% of the total subscriber base (Business Monitor International, 2011). This aspect was a marginal increment from 9.3%, which was reported early the same year. During the same period, the prepaid subscribers fell from 90676 to 9.607. This fall could be attributed to the discounting of inactive lines.

In 2009, Du’s reports showed that it had about 170,000 postpaid subscribers on its network, which was about 4.9% of its total customer base (Kovacs, 2014). The operator had been in continued efforts to improve the quality of its subscribers. The efforts included offering attractive bundles containing free voice and data bundles.

Due to these efforts, the number of postpaid subscribers on its network increased to 194,000, which translates to 5% of its total subscriber base by the beginning of 2010. The growth in subscriber base continued in 2010 so that by the end of that year, the operator reported a net gain of 51,000, thus increasing its postpaid subscribers to 296,000, which was an equivalent of 6.8% of its total subscriber base at the end of 2010 (Business Monitor International, 2011).

A further expansion in subscriber base was experienced in early 2011, where 46,000 subscribers were recorded. After this addition, the operator’s postpaid subscriptions rose to 306,000. Nevertheless, there was no impact on the subscriber mix because increase intake of prepaid services meant that the proportion of postpaid subscriptions fell marginally to 6.6% of the total customer base by early 2011.

From the above subscriber data from Du and the market data from the TRA, it could be estimated that by early 2011, Etisalat had about 932,000 postpaid subscribers. It is important to note that Etisalat does not provide a breakdown of its subscriber mix. This aspect constitutes 14.4% of its total subscribers. From these figures, an increase is noted from 807,000 to 916,000 postpaid customers between March and December 2010.

Like its competitor, Etisalat sought to improve its subscriber mix and launched a new postpaid service dubbed MyPlan targeting existing and new postpaid customers. MyPlan offered four flexible packages with a maximum monthly tariff of AED449. In the package, there are different options for both international and local calls, mobile data, and text messages. The operator also provided subscribers with free smartphones or at discounted prices depending on the selected package.

The effect of this poor subscriber mix in the UAE is noticeable on the operators’ Average Return Per User (ARPU). In this case, Du is the only operator that releases regular ARPU data. The figures show a large fluctuation, which first rose to a peak of AED112 in December 2009. In early 2010, the ARPU fell to AED108, but rose again to AED111 by mid-2010.

This move was followed by another drop to AED108 and another rise to AED125 by the end of 2010. In early 2011, the ARPU dropped slightly to AED118 (Kovacs, 2014). This data is difficult to analyze because it does not follow a certain pattern, despite the steady customer base. It is likely that this trend is the same with Etisalat.

This fluctuation of ARPU experienced by Du could be explained by the impact of short-term promotional activities that the operator performs to attract new customers. For instance, during the festive season of Eid al-Adha, Du offered reduced tariffs for mobile and fixed-line international calls.

The operator further discounted rates for its voice calls and short messages (SMS). Etisalat also ran a similar promotion that allowed its subscribers to enjoy off-peak rates for international calls. In January 2011, Du launched another promotion, which offered free international and national calls as well as SMS and data bundles to its subscribers based on the package chosen.

Third Generation (3G) Services

Third generation (3G) mobile services have been available in the UAE since early 2004 under the Etisalat’s services, but the uptake was very low. However, in 2007, Etisalat had to take action owing to the impending end of its monopoly after Du launched its services. In order to increase its 3G subscribers, the operator took a step and canceled all the access fees for 3G services. Consequently, there was an increase in 3G take up, and the operator claimed to have up to one million 3G subscribers by mid-2007.

This move was followed by upgrading from W-CDMA to HSDPA (3.5G) technology. In 2007, Etisalat partnered with Nokia in a move aimed at accelerating the adoption of mobile Internet services on Nokia handsets (USA International Business Publications, 2007).

Through these moves, Etisalat managed to launch a 3.5G router in 2008, which could offer up to 7.2Mbps download speeds and support up to 32 real-time connections using a single SIM card. By June 2009, Etisalat completed its nationwide upgrade of the 3G network, which could enable download speeds of 14.4Mbps (Business Monitor International, 2011).

Within one month, Du announced its plans to expand its network coverage in high traffic areas. This move involved in-building upgrades, which improved indoor connectivity to shopping centers, airports, hospitals, universities, and hotels. These areas could have GSM, GPRS, EDGE, 3G, and 3.5G connectivity. The review of this literature shows a counter-strategy behavior between the two service providers. This paper will explore the particular strategies that the two rivals have implemented, the results they have achieved, and the reactions of each service provider to the competitor’s strategy.

Data Collection and Analysis

This section explains how the study of the marketing strategies of the two companies has been carried. The section reports a comparative analysis of the strategies adopted by the two service providers.

Method

The data used to compile this analysis was gathered from the promotional information materials from the companies’ websites, magazines, advertisements, newspapers, as well as other literature related to the subject. In addition, 110 subscribers were interviewed randomly and asked about their views about some marketing strategies of the two telecoms.

The Evaluation of Market Strategies

Etisalat

Market Segmentation

Etisalat has divided its market into different segments, viz. casual callers segment, business callers segment, and local callers segment. Two other segments, viz. expatriates late-night international caller segment and midnight international caller segment, have almost similar offers. Since the majority of the UAE population is expatriates, Etisalat has developed its favorite country plans to retain the share in the market.

The company encourages calling in late at night by offering off-peak hours so that the network is fully utilized. Its super off-peak hour is a midnight calling plan that encourages the users to make calls late at night. Expatriates from various regions across the world use this tariff extensively. Etisalat covers all segments of the market, and classes from the lower class, the middle class to the upper class, and business class.

Target Market Strategy

Etisalat targets the entire market and markets where users require quality services. It also seeks to cover the different segments with different attractive plans. Their strategy, in this case, is to ensure that the customers make calls cheaply during off-peak hours while enjoying quality services. These off-peak plans help to beat its network load. In addition, the strategy gives international economic calls during off-peak. The operator also alerts its customers in cases of occasional modified off-peak hours.

Pricing Strategy

The pricing of products is very important in every company as it helps to acquire market share in a very competitive market. Etisalat’s strategy on pricing is to offer a standard price to its customers, but at the same time, ensure good quality services. The company ensures that its network is always capable of handling voice traffic at any given time.

The connection fee of Etisalat remains higher than that of its competitor. In addition, Etisalat’s call rates have not changed significantly with time, but it gives several offers to the customers in the form of discounts. For new connections, Etisalat charges considerably high prices to connect the customer and make the product worth full.

Product Mix Pricing Strategies

Etisalat wins customers by its quality services, and it offers a bundle pricing strategy. These packages are made befittingly to suit the varying needs of different customers. The packages have reduced prices to meet the requirements of as many customers as possible. For subscribers who want to call late at night, the provider has a super peak hour in a package called Wasel.

The package offers low rates on international calls, but the callers have to incur higher prices for the local calls and SMS services. In a bid to recharge the Wasel prepaid package, Etisalat offers the following denominations 500AED, 200AED, 100AED, 50AED, and 25AED.

Price Adjustment Strategies

Etisalat operates a very complex tariff. For several years, there has been no significant reduction in local calls. However, the operator has multiple price strategies for its different plans. The company “designs suitable price plans using allowance and discount as well as promotion and segmented pricing strategies” (Cherrayil, 2014, par. 8). This way, it ensures that the plans suit the customers’ needs. Etisalat runs promotional and allowances pricing, and it offers discounted prices to increase uptake of its services.

Price Change Strategy

Due to the market situation, Etisalat cut its prices to maintain excess capacity. This move was driven by the fact that Etisalat seeks to maintain a fair price and save its brand image, although its prices remain higher as compared to those of the competitor. The price change strategy ensured that the price of the main products remained the same. This goal was achieved by reducing the connection and renewal fees and offering a payback option. With this strategy, the local call and the messaging charges remain the same.

Du Strategies

Market Segmentation

Du has divided its market into different segments, viz. casual callers segment, frequent callers segment, rare dialers segment, business callers segment, office break callers segment, visitors, and late-night international callers. For each plan, the operator has a suitable plan that meets the needs of the users.

The plans are very flexible, and the users can change to their favorite plan at the time of recharging. Quite interesting is the visitors’ plan for tourists and other visitors whose stay is limited to three months. This segment offers a connection validity of three months and has a balance back facility.

Target Market Strategy

The focus market for Du is where users are looking for low-cost calls. As compared to Etisalat, Du offers very attractive and lower-priced packages. These low-cost packages are the major factors that attract customers from Etisalat to Du.

Pricing Strategy

Du’s main objective is to increase its market share by offering very economical services to the appropriate market segment. Consequently, the operator offers very low prices as opposed to its competitor. Etisalat aims at offering quality services, and thus it does not respond to the low prices by dropping its prices, though it occasionally gives offers and discounts to its customers. The low price gives Du a competitive advantage, as customers are always cost-sensitive (Sinclair, 2013).

Product Mix Strategies

Just like its competitor, Du uses a bundle pricing strategy in its packages. This bundle pricing is advantageous to the company as on one side, it is an offer to the customers, and on the other side, there are conditions imposed. For instance, in its international package, subscribers get up to 30% extra credit valid for one month with the condition that all the credit has to be used to make international calls only.

Price Adjustment Strategy

Du has multiple price adjustment strategies. In all its packages, it adopts discount and allowance pricing. There is a bonus on credit, which is available on all packages, and it provides allowances to the users. This bonus credit is earned more as the subscribers continue using the service. Another price adjustment strategy used by Du is per second billing. This plan beats the Etisalat’s per-minute billing as the customers are satisfied that they are paying for only what they are using.

Price Changes Strategies

Du entered the market with the lowest prices and dropped them further to gain more market share. The operator has also revised its monthly package to the Elite package. This move is meant to provide a tariff, which is economical to the subscribers. Du also improved its bonus balance to attract customers to recharge more frequently.

The Analysis of Customer Views

Customers were asked to state which telecom company they trust in. The figure below shows their responses.

The number of subscribers for each service provider is represented below

Customers were asked to state, which among the two service providers satisfied them. The responses are represented below.

Customers were asked to rate the overall image of the companies. Figure 4 below shows their responses.

Customers were asked to state which company fully solved their communication problems. Figure 5 below represents their responses.

Customers were asked if they were aware of the new packages offered by their service provider. Figure 6 below shows their response.

The survey carried by interviewing customers indicated that Etisalat still maintains the largest share by 54%, although 34% of the subscribers use both services. Out of the 110 subscribers interviewed, 40 of them trusted prices of Etisalat, while 35 of them trusted prices offered by the two companies.

There is a tie on whether the two telecoms solve the customers’ needs. This assertion is confirmed by an almost equal number that is satisfied by the services of the two operators. Du’s subscribers seem to be highly informed about the packages offered by their service providers. This aspect could be attributed to advertising and promotions.

Conclusion

Two companies serve the UAE’s telecommunication industry, viz. the Etisalat and the Du. Etisalat commands the largest market as it enjoys 80% of the market share. Since Du entered the UAE market, Etisalat has been experiencing a declining number of subscribers. This slowdown experienced by Etisalat indicates the high mobile penetration rate in the UAE. It also signifies intense competition caused by Du. This steep competition is having a considerable effect on the subscriber growth for Etisalat.

In a bid to attract more subscribers and retain the existing ones, the two companies have been employing counter-strategies. Etisalat has segmented its market into casual callers’ segment, local callers’ segment, business segment, expatriates late-night international caller segment, and the mid-night international caller segment.

The operator offers a different price package to meet the needs of its clients in each segment. On its side, Du has segmented its market into the casual segment, frequent users segment, rare users segment, business class segment, office break segment, visitors, and late-night international callers segment. Like its competitor, Du gives a suitable package for each segment.

The focus of Etisalat and its strategy on pricing is to offer a standard price to its customers, but at the same time, ensure good quality services. Therefore, the company ensures that its network is always capable of handling voice traffic at any given time. On the other hand, Du’s main objective is to increase its market share by offering very economical services to the appropriate market segment. Consequently, Du’s prices are lower as compared to those of Etisalat. Due to the differing market objectives, Etisalat does not respond by lowering its prices.

Recommendations

1. Despite offering the lowest prices, customers still do not seem to trust Du. Therefore it needs to reverse this situation. Probably, customers doubt the services offered by Du, and thus the company should improve the quality and reliability of its services.
2. Despite being the market leader, the image of Etisalat does not appear good to the customers. This aspect could be due to high prices as customers are cost-sensitive.
3. The Etisalat’s subscribers seem not to be aware of what the operator is offering. The company needs to communicate thoroughly to its clients on what is on offer.
4. Despite its low prices, customers do not seem to be satisfied with the services offered by Du, which could be due to the compromised quality of services.

Further Research

The Telecommunication Authority (TRA) has revised its regulations, thus making it easier for the operators to change their rates so that they can compete with one another more effectively. Surprisingly, this increasing competition has not seen prices falling, which is quite evident in other mobile markets. Therefore, there is in need to study this unusual market behavior in the UAE telecom market.

References

Business Monitor International. (2011). United Arab Emirates Telecommunications Report Q3 2011. London, UK: BMI.

Cherrayil, N. (2014). Etisalat offers better postpaid mobile value than du: report. Web.

Hamid, T. (2013). Competition is key in UAE telecoms sector. Web.

Kovacs, R. (2014). Economic and legal analysis of the United Arab Emirates’ telecommunications market. Web.

Sinclair, K. (2013). UAE telecom users outraged by du’opoly as bills hiked. Web.

USA International Business Publications. (2007). United Arab Emirates Telecommunication Industry Business Opportunities Handbook. Washington, D.C: Intl. Business Publications.