Category: Telecommunications

Brazil

Brazil is the telecommunication hub of Latin America. It boasts of the biggest and sophisticated telecommunication industry the region. The National Telecommunication Agency is the industry’s regulatory body. It seeks to ensure that the players enjoy protection from unhealthy competition while at the same time ensuring high regard for consumer interests. The industry comprises of firms that provide fixed line telephone services, mobile phone services as well as internet and cable television services (Leandro, 24).

The liberal and competitive environment, has not only favored local investment in the industry in the country, but has also attracted foreigners, as well. Some of the foreigners have made partnerships with local firms. The biggest players in the industry include the Telefonica Group, America Moville/ Telmex Group and the Oil (Telemar). These companies have subsidiaries that provide the different services to the industry at various levels with respect to geographical variation and income levels of the people. The nature of competition is thus based on the regions of operation and the target market for the various investors.

Investment opportunities are, however, more promising in the wireless sector of the industry because of the vast growth that continues to be experienced in it. The potential is not effectively tapped, explaining the low-penetration levels by the industry players currently in the market (Millar, 34).

Russia

In Russia, the telecommunication industry is vey advanced and different from that of Brazil. For instance, it is regulated through the Federal Law on communication. The fixed line sector is highly developed, and is based on a highly networked fiber optic cable that is spread out throughout the country. The industry was for a long time state controlled, and thus private companies’ investment was not possible. However, the liberalization programs of the 1990s paved way for players in the other fields of telecommunication- mobile phone service providers and internet service provision to hit the market. The result was aggressive coverage that explains why the country is currently among the highest ranked markets for mobile telephone operators (Litecky et al. 112).

India

India’s fast growing economy can be attributed to the country’s relentless investment in among other industries, telecommunication. The industry has experienced extensive reforms that have encouraged continued growth in terms of coverage and subscription to services rendered. Among the firms with significant control in the industry include the state run BSNL which provides services for fixed lines as well as mobile phone subscribers. It is the largest in India, and faces competition from other firms such as the government owned MTNL and VSNL, the privately owned indigenous BHARTI and TATA Teleservices as well as the internationally owned Vodafone which operates as HUTCH in India (Christensen, 3).

The investment opportunities in the country are very encouraging due to the potential that lies within the regions that have not been effectively exploited. This is because the greater percentage of the market is untapped, and the nature of the already exploited is such that it is customer driven. For a company with bigger bargaining power in terms of service delivery and customer satisfaction, investment is likely to be viable in this country. Diversification of telecommunication services is also the key to attainment of success, especially through partnership with already established industry players in provision of such new services (Patterson, 45).

China

The sub continent China boasts of a highly dynamic economy that revolves around information and technology with respect to heavy investment in development infrastructure of which telecommunication is pivotal. The telecommunication industry as is the case with most of the other industries in china is mostly state protected due to the country’s system of governance that is communistic.

This means that investment in the country is mainly by locals, with the international community being allowed limited or no space within China’s economy. State run China Telecommunications Corporation also called China Telecom is the biggest player, and offers services that range across the board in telecommunication. Its strength is mainly etched in the government support it obtains. However, there are other players in the industry who cater for the ever hungry market that due to its size and nature of demand can not be fully satisfied by the corporation (Porter, 17). These players include china Mobile (Hong Kong) Limited which specializes in provision of mobile phone services as well as related services.

This company owns a number of subsidiary companies which operate on its behalf in the various regions in China, China Unicom whose parent company is the China Telecom and China Netcom Corporation. It is worth noting that recent relaxation of the country’s policies has seen massive interest by the international community especially since the cost of telecommunication equipment in China is relatively low (Boulton, 45).

Investment rationale

For a global business wishing to invest in these countries in the telecommunication sector, it can be seen that Brazil and India are most ideal due to the liberal nature of their economies. This is because there is an element of fairness among the players, and the market being demand pulled does not have restrictions nor insurmountable difficulties to new firms entering it (Walker, 10). This is however not the case with China since the state exerts too much control on its economy.

Coupled with massive investment potential in the two countries (Brazil and India), the prospects of investment in them are more economically viable in the long run, especially in the mainstream sectors of the industry. This does not mean that investment in Russia and China is not worth undertaking. This is because this may not necessarily be directly, but as partnerships with local companies that have already established themselves in the industry to widen their scope of services (Millar, 23).

Works Cited

Boulton, William. China Telecommunication Industry Overview. 2007. Web.

Christensen, Clayton. The Past and Future of Competitive Advantage. MIT Sloan Management Review, 42.2 (2001): 1-6.

Leandro, Rosa. Brazil Telecom/ IT Industry. 2007. Web.

Litecky, Charles et al. Competitor Analysis and Its Defenses in the E-Marketplace. Communications of the ACM, 48.8 (2005): 107-120.

Millar, Porter. Competitive Advantage: Creating and Sustaining Superior Performance. New York: Free Press, 1985.

Millar, Vincent. How Information Gives You Competitive Advantage. New York: Harvard Business Review, 1985.

Patterson, Evans. Blown To Bits: How the New Economics of Information Transforms Strategy. New York: Harvard Business School Press, 2000.

Porter, Michael. The Five Competitive Forces That Shape Strategy. Harvard Business Review, 1.1(2008): 1-20.

Walker, Beth et al. Competitive Cognition. MIT Sloan Management Review, 46.4: (2005), 1-11.

Telecommunications: Why Are They Important?

Nowadays, telecommunications offer a variety of tools for business to maintain connections within an organization as well as keep in touch with customers. First, introducing telecommunication has proven to be time-saving: a group video conference eliminates the need for commuting, arranging meetings to accommodate everyone, and booking flights and hotel rooms. Moreover, implementing this element is time-saving: gone are the times when customers had to wait for days to get a response in the case of a request or a complaint. Telecommunications make employees more mobile and allow them to exchange messages or make calls in an instant. In the case of SewWorld, apart from the mentioned advantages, the company is likely to enjoy enhanced team collaboration. The six locations will no longer act as separate entities but consider each other’s activities. Another role assigned to telecommunications would be customer satisfaction: buyers will be more happy about their experience if the processing time is reduced, and errors are few and rare.

How Are the Six Elements Applied?

As for the other elements, hardware will allow for the installment of more sophisticated programs and smoother user experience. The market for software for business is incredibly diverse and offers many options for tracking and automating sales processes. Moreover, SewWorld will benefit from performance reports and other statistical data. The Internet will make ongoing data exchange and seamless interaction between the locations possible. In general, information technology, and database management systems in particular, might solve SewWorld’s most pressing issues by retrieving, transmitting, and manipulating data to help to meet the company’s goals. There is no information on whether SewWorld has an IT department at its disposal. If it does not, it should consider hiring specialists, for example, system administrators, to handle hardware and software. Computer scientists could take care of information technology and database management. Internet and telecommunication tools should be available to everyone, and those who struggle to use them efficiently should enroll in training.

The Saudi Telecommunication Industry is rated as the largest across the entire Middle East region. The estimated subscriber base in the year 2008 was estimated at about 42 million. The Middle East region is known for high population density as well as high population growth. This is the single most important factor which has caused a high expansion in the local economy. The authorities have also continuously supported the industry in a development, expanding and the recent privatizations. The role of the government has enhanced penetration of the services to very high levels. This paper analyzes the Saudi Telecommunication industry with more focus on the Saudi Arabia Telecommunication Company STC which is the largest player in the Middle East market and whose actions, inactions and performance directly determines the direction of the entire industry in the region (Country Profile: Saudi Arabia, par5-7).

The Saudi telecommunication market in the Middle East has been continually transformation within the last 10 years. Commitments made in the year 2005 as Saudi Arabia joined the World Trade Organization led to the privatization of the long dominant monopoly which was publicly owned. The market was also significantly liberalized. The market is dominated by mobile line subscriptions as opposed to the fixed line. The mobile lines take up over 90% of the entire market by the year 2008. Unlike the fixed lines, the mobile lines sector embraces diversity as well as extreme flexibility thus proving convenient for the population thus the high level of acceptance. This has offered adequate incentive for investment. The fixed lines have had very slow growth in the region. This is as a result of under investments. The situation is occasioned by the fact that the line is much less dynamic and confers minimal diversity to the people (Telecom Privatization and Learning’s in the Kingdom of Saudi Arabia, par8).

Over the past eight years, both the mobile line and fixed lines have registered increased penetration though the fixed line segment falls short of the expectations set out by the development plans (Saudi Arabia Telecommunication Industry, par3).

The sector is regulated by the Communication and Information Technology Commission (CITC) a body formed in the year 2001. The commission issues licenses to private operators, and is also mandated to regulate multimedia service providers, telephone as well as internet. The body works in parallel with the Ministry of Communications and Information (MCIT) to support growth as well as enforce regulations against abuse of powers due to market dominance. The MCIT develops the program policies and programs aimed at developing the sector (Saudi Arabian General Investment Authority, par8).

The two main licenses issued are the individual licenses and class licenses. Individual licenses are issued to those who wish to offer a single service such as mobile data service, fixed voice telephone, mobile telephony and any other related service. Class licenses are categorized into Type A and Type B. Type A licenses are issued to hose offering voice resale services nationally and internationally, VSAT (Very Small Aperture Terminal) as well as satellite and pay telephones. Type B applies to those offering value added network services as well as internet services providers.

The Saudi Telecommunication Company was founded in 1998 as the sole provider of fixed line provider, paging services, internet as well as wireless telephones in the region. The company remained a monopoly up to the year 2003 when the process of privatization began. It was changed to a joint stock company. With a paid up capital of SR 12 billion a value which was raised to SR 15 billion after which an initial public Offering was undertaken leading to a 30% offloading of the capital. 90 million shares were sold to the public at SR 170 per share. To date, Locals hold a 20% stake of the company while the other 10% is owned by the Pension Fund and the General Organization for social insurance. This privatization move set the way for the successive streak of innovations and expansion in the private sector for the entire telecommunication sector.

The sectors liberalization has been stepwise. Introduction of the GSM operations saw the CITC license new operators in the VSAT services as well as mobile and fixed services. This led to the entrance of Mobily and Zain. The introduced competition enhanced tariff reduction as well as a rise in the number of subscriptions in the region. The fixed line saw a company named Etihad Atheeb Telecom Company (Atheeb) enter to offer services such as Broad band and international Gateway. The company acquired 3.5 GHz frequency spectrum at SR 522.9 million and an additional SR 5 billion in the form of license fee relating to the fixed lines (M&A volumes in GCC to reach $25b in 2010, par8).

By the year 2006 inflow of foreign equity had risen to 49% and later 51% in the year 2007 and a peak of 60% recorded in the year 2008. This was in the joint stock fixed line company. Foreign ownership had risen to 51% by 2006 and 70% by 2008. In addition export of telephone services had been largely allowed though under certain conditions stipulated by the CITC. The end of year 2008 saw the culmination of the transition process towards the stipulations of the WTO.

For local companies operating in the mobile line market, the foreign ownership is a maximum of 70% as at the year 2007. VSAT licensees were limited to only five but the situation changed in the year 2006 when it was declared that the VSAT licenses would be unlimited both for local as well as international players.

As mentioned above, the Saudi Arabian market is the largest and fastest growing in the Middle East, in the year 2008 it was established that the market recoded 37% growth in the purchased total market value of telecom services. The total valuation was stated as SR59 billion. STC led the market as I controlled 80.8% of the market while Mobily controlled 18.4% and Zain 0.8%. The average consumption per subscriber was estimated as SR2390. Ironically, SR2390 is the per capita consumption which is significantly higher than consumption per subscriber. The implication is that subscriptions surpass the population numbers by over 15 million. This means that a large proportion of the population have access to more than one line. This is an indication of a fairly strong market demand.

For the period of one year ending in June 2009, the total turnover for the combination of STC, Mobily and Zain was a whooping SR72 billion. This was 22% higher than the previous year. These achievements were supported by the aggressive innovations and hence launch of new services to supplement the core services which increased avenues for which the companies could attract new revenues.

On the supply side 4.1 million lines were supplied by STC both fixed and mobile. The percentage of STC’s fixed lines held by households was 73% and the remainder was held by business entities. In the mobile telephony, the total capacity of the three players was 36 million lines in year 2008. This represented a growth of 26.7%. STC accounted for over 55% of the entire supply in the market, mobily supplied 38.9% and Zain about 5.6%.

The last twenty year has seen STC constantly increase its operations in the fixed line segment as a result of technological progress as well as population growth. Over his period, a 19.4% Compounded Aggregate Annual Growth Rate (CAGR) has been achieved which when compared to the population is about six times higher. Nevertheless, the last 8 years have seen a significant slowdown in the pace of growth occasioned mainly by the entry of mobile lines offering flexibility and dynamism and the inadequate investments by the company in the segment. Within this eight years period the CAGR recorded stood at 4.1% which as can be seen is significantly lower than the CAGR for the entire 20 year period.

According to the development plan for the year 2000-2005 the fixed line segment was expected to grow to approximately 5.78 million lines. The actual results fell short of these expectations as only 3.84 million lines were recorded by the close of year 2005. For the period between 2006 and 2008, only 260000 lines only reducing the shortfall rather than achieving new targets. Looking at the penetration rates the target was 33.6% however only 16.6% density was achieved by the end of year 2005. Despite the entrance of Atheeb, experts warn that it is unlikely that the target of achieving a density of 27% by 2010 will be achieved. They estimations show that only 16.8% penetration is likely to be achieved (Mergers and Acquisitions News, par6).

The entry of GSM technology occurred in the year 1994. Phenomenal growth from a subscription of a paltry 16000 offered by STC alone to 36 million in 2008 offered by the three providers has been witnessed. A 57% growth of CAGR for the market was registered for the ten year period between 1990 and 2000. Despite this growth, the last eight years have seen the CAGR falling to the current 50%. This is interpreted by experts to imply that the service is gradually approaching the maturity stage of product lifecycle. As competition set on, and demand rose, the market for mobile lines saw continued transformation. As Zain was being launched in the year 2007, the existing players, mobily and STC could be seen to engage more competitive strategies. STC committed over SR22.5 to expand regionally in a bid to try and catch up with big regional players such as Zain. Mobily on the other hand was into price cutting and the development of incentives to customers such as the ‘free roaming’ across 56 countries in a bid to counter the powers possessed by Zain with the ‘Zain One network’ advantage.

In the last three years both STC and Mobily have shifted competition into offering 3G services such as high speed internet, video streaming, conferencing and calling as well as multiplayer gaming. The CAGR of 124% has been recorded for the last 4 years up to 2007 for broadband services. In fact the years 2006 and 2007 saw a 10-fold rise in the CAGR (Saudi Arabian Telecom Industry, par7).

A relook at the density analysis shows that the rates have grown by over 100% within the last two decades. 8.5% was the ratio as at the year 1990 while by the end of year 2008, the rate had grown to about 16.5% for the fixed line. Despite this the performance in the fixed line segment is below the regions average. The main reasons are lack of adequate competition in the segment as well as the unwillingness of STC to invest heavily in the segment.

In the mobile line segment, the density stood at 144.8 lines for every 100 individuals. This can be compared to a figure of a paltry 6.8% recorded in the year 2000. Clearly this sector has achieved high growth in the backdrop of liberalization characterized by privatization as well as the introduction of competition. As a result, the total density as at 2008 stood at about 161.3 for every 100 people.

In the future, there are expectations that the fixed line segment will grow due to the prospects indicating that investment in segment is likely to increasing hence improving demand. There are expectations that three new operators will join the market especially in the provision of broadband services and will invest in alternative infrastructure effectively bypassing the STC’s facilities. Batelco, a company from Bahrain in conjunction with Atheeb are set to invest a billion dollars in new technology called WiMax, Pacific Century CyberWorks (PCCW) from Hong Kong will develop fixed-wireless networks. In addition, Verizon from the US wishes to establish a relationship with STC to offer fixed-wireless services.

As the Saudi Arabian Kingdom embraces the concept of e-government, demand for more complex IT services is on the rise. It should however be noted that most of the projects outlined above are in their initial stages meaning that there is still more time required to establish the performance of the industry in the future.

Consequently, the most visible strengths of the industry are several. First, the rate of growth of the fixed line was about 6.6% which is triple the growth rate f the population for the period between 1990 and 2008. The implication is that the growth of the sector is not limited by the rate at which population grows. Looking at the 4.1 million fixed lines and the fact that 73% are subscribed by household while businesses hold 27%, it is clear that there are growth avenues especially in the business sector which in normal circumstances is considered to have the greater potential. In addition, demographics indicate a rise in population but a decline in the size of the family. This means that the future is expected to record constantly increased demand telecommunication services. It is also expected that by the year 2020, the business community will be expected to swell to above 1.3 billion. The indication is that, demand for telecommunication technology and other related services are expected is expected to be on the rise. The estimated needs for the period up to 2020 in the fixed line sector is expected to be in the range of 5.9 million (Saudi Telecom Co. par5). Also, it is clear that a slight increase in population is bound to generate an even higher demand. This is due to the fact that about 45% of mobile line holders have more than one card. Even more important is the fact that an estimated 60% of mobile phone users are in the prepaid rather than the post paid category. The implication is that the high uptake of prepayment avails better financial stability strengthening cash flows as well as balance sheets for the providers (More M&A in Saudi telecom sector seen, par5).

There are several clear opportunities in several areas of the sector. First, the regulatory framework is highly improved mainly because the percentage of equity allowed for foreign investors is 70% for mobile phones and 60% for fixed lines. This means that foreigners are at greater advantage and can effectively invest in the country. There are also plans by the authorities to ensure that ISPs cut their prices to enhance the development of IT growth centers across the country.

The most visible weaknesses in the industry are several. First, despite the introduction of competition, the industry still relies heavily on the ADSL network provided by STC. Again, the registered number of active mobile lines is 36 million a figure which is 11 million higher than the entire population. In addition, there are ongoing price wars in the industry and it is clear that the effect on revenues and profitability of the firms can already be observed. On the other hand the sector relies heavily on expert labor which is in short supply in Saudi. Hiring expatriates from outside the country is a much more expensive undertaking for new entrants (Telecommunications Report Saudi Arabia, par5).

There are also several threats in the industry. The most important is the explosion in growth of the mobile phones. This is posing serious risk to the growth of the fixed line segment and actually has the potential to stagnate the segment. More and more people choose the mobile lines due to the flexibility and if the rates are as low as those in the fixed sector then the segment is likely to even shrink rather than expand. Thirdly, the price wars are likely to pose serious threat to the operators in the long run as margins are poised to continually shrink a factor which could reduce return on investment in the sector putting off investors. Again, Saudi Arabia has a high unemployment rate especially among the youth who are the most important people in the uptake of the services in the mobile line segment. This poses a challenge to the growth rate of demand for the industry which is supposed to support future expansions.

In the year 2009 and 2010, STC has recorded significant growth in line with the industrial trend. Operating revenues rose from SR47.5 billion to SR 50 billion. Net income levels however dropped from SR11 billion to 10 billion following a rise in operational costs (Global Finance, par3). Consequently, the earnings per share on Net Incomes fell from SR5.52 to SR5.43 (STC. Consolidated Financial Statements for the Year Ended December 31, 2009, p2-4).

The company has engaged in several mergers, acquisitions as well as joint ventures over its entire lifetime. Over the past ten years, the company has witnessed at least one acquisition and about 3 stakes in bid to expand its operations. The most important factor which bestows immense powers on the company is the fact that it is publicly funded meaning that access to funds is much easier in comparison to other private players (Research and Markets, par5).

In the year 2000, the company acquired Flag Telecom Holdings Ltd owned by a company called Reliance Communications. Flag Telecom operated an underwater cable system (Mena telecom merger and acquisitions to reach $30bn in 2010, par9). The aim of this acquisition was to acquire infrastructure to facilitate international connectivity in telephone as well as internet services. In the year 2002 the government made a decision to divest from the company allowing foreign investors to acquire a size4able stake at the company’s equity (Saudi Telecom Company, par 2).

Again, in the year 2007, the company acquired a significant stake in AwalNet. The company was an existing internet provider in Saudi Arabia (More M&A in Saudi telecom sector seen, par7). This acquisition gave STC an avenue to diversify products a factor which not only helps in improving the future ability of the company to generate revenues but also reducing its vulnerability to business risks. Later in the same year the company acquired a minority interest in a Malaysian company called Binariang GSM Sdn Bhd (Telecom Investment Opportunities in the MENA Region Multiple, par5). This company was an investment holding company based in Malaysia with major investments in the telecommunication industry. The intention in making this decision was to tap into the regional market in a bid to expand into new markets and improve market presence hence gaining competitiveness against other giants such as Zain in the region who according to the management posed potential threat to the company in the context of regional dominance (MENA Mergers & Acquisitions Activity, par4-5).

In the year 2008 the company acquired a minority stake in Oger Telecom a company based in Dubai and offering telecommunication services. The action led to improved indirect expansion in to the Middle Eastern region in line with the company’s goals (John, par7).

It is the view this writer that investing in the telecommunications in Saudi Arabia may not be a good decision for an investor. This verdict is based on several considered observations. First, it is clear that the giants of the Middle Eastern region are already in the market. They not only have the requisite experience in telecommunications, but also better understand the needs of the region. This puts them at an advantageous position to not only develop better products for the country but also take advantage of the cross-border communications which offer substantial edge. In addition, the players already are recognized leaders in the development of new services and products. Secondly, it is clear that most of the products have reached the maturity stage in the product lifecycle. The implication of this is that the future growth is much less as compared to the past. This means that new entrants would face a stiffer scramble for the market share. The competitors already in the market are financially strong and could easily out price new entrants in a bid to protect their markets. In fact, the only viable investment would have to be in the introduction of more complex products with the ability to introduce new useful concepts rather than the traditional areas (Saudi Arabia Major Business Sectors, par9).

In conclusion, the recent years have seen tremendous growth in the telecommunication sector in Saudi Arabia. STC has maintained the lead by ensuring that they are pioneers in the introduction of new telecommunications technologies and products. It is clear that in the near future the company is likely to continue in the lead and despite the liberalization processes.

Reference List

Country Profile: Saudi Arabia. Library of Congress – Federal Research Division. 2006. Web.

Global Finance. Saudi Arabia. 2010. Web.

John Isaac. GCC telecom companies invest $33b in cross-border M&A deals. 2010. Web.

M&A volumes in GCC to reach $25b in 2010. Web.

MENA Mergers & Acquisitions Activity Update. 2008. Web.

Mena telecom merger and acquisitions to reach $30bn in 2010. Web.

Mergers and Acquisitions News. Financial Tech Spotlight. 2010. Web.

More M&A in Saudi telecom sector seen. Pioneer holdings. 2010. Web.

More M&A in Saudi telecom sector seen. Saudi Telecom. 2010. Web.

Research and Markets: Mergers and Acquisitions Report. 2010. Web.

Saudi Arabia Major Business Sectors. 2010. Web.

Saudi Arabia Telecommunication Industry. The National Commercial Bank. 2010. Web.

Saudi Arabian General Investment Authority: ICT. 2010. Web.

Saudi Arabian Telecom Industry. RTT News. 2010. Web.

Saudi Telecom Co. Gulf base. 2010. Web.

Saudi Telecom Company. Alacra store. 2010. Web.

STC. Consolidated Financial Statements for the Year Ended, 2009. Web.

Telecom Investment Opportunities in the MENA Region Multiple, 2010. Web.

Telecom Privatization and Learning’s in the Kingdom of Saudi Arabia. 2010. Web.

Telecommunications Report Saudi Arabia. STC. 2010. Web.

Abstract

Strategic marketing is one of the most important strategies that many companies have adopted for their marketing. Without strategic marketing, most organizations would be unable to achieve their short and long term goals effectively (Czincota 2009, p. 112). Telecommunication industry requires a very comprehensive marketing for it to succeed (Gershon 2001, p. 45).

Many promising communication companies across the world have employed different marketing strategies in trying to ensure they meet the ever changing market demands. Such companies have devised marketing strategies, which have seen grow over years. However, new companies meet several challenges before they enter telecommunication industry fully. For new entrants, their success is based on only on market researches and well laid marketing strategies (Don 2005, p.57).

Nigeria’s telecommunication services are growing rapidly today. This can be attributed to its fast moving economy and population growth (Hakan 2004, p. 211). As a result, communication technology has found a good ground in this country. Nigeria’s telecommunication industry is today, facing a very stiff competition.

There are several communication providers in this industry such as Accat, Accellon Nigeria Limited, Galaxy Information Technology and Tel. Limited, Nigeria Telecommunication Limited and Integrated Communication and Network Services among others. To survive in the market, these organizations have come up with different marketing moves (Hart & James 2005, p.113).

Nevertheless for any company to have competitive advantage, new marketing strategies need to be developed. This can be carried out through researches to identify new opportunities, niches, segments and marketing mix that have not been utilized (Adcock & Al Halborg 2001, p.111). Researches are also necessary for sustainable growth for any company operating in the Nigerian market. Strategic marketing has proved to be the best marketing mode in Nigeria among the players (Brown 2010, p.89).

Introduction

The aim of this paper is to come up with a new marketing strategy in Nigeria’s telecommunication industry. The strategy is aimed at developing counter competitive moves, customer retentions, market expansions and profit maximization.

Consequently, the paper is aimed at identifying sustainable mode of marketing in the global perspective through meeting technological dynamics and multicultural diversity. From the research and literature reviews, despite, stiff competition in the Nigerian telecommunication industry, the country still has a lot of marketing opportunities. This research is for five years organization focus.

Research Objectives

To meet the research goals successfully, several objectives are set to guide the research team. The objectives are clearly stated to help for easy understanding and interpretation during the study (Alexander 2009, 117). The following are some of the objectives developed for the telecommunication industry in Nigeria (Creswell & John 2009, p.32)

1. To find out possible market expansion gaps expand in a five year period
2. To find out the best customers retentions methods in the market
3. To find out the Nigeria telecommunication marketing trends
4. To determine the best competitor strategies
5. To find out how Nigerian telecommunications’ external environment influence its marketing

The objectives were developed based on their achievability, measurability and specificity. The objectives are also useful for developing action plan as they are guides to priorities for the people working on them and specific end term goals. To achieve the goals there are also follow up mechanisms over the objectives (Creswell & John 2009, p.13).

Research Questions

Questions were developed to guide the researches during this study. The questions were created to ensure that the research was conclusively covered and the data gathered were consisted and reliable. The study questions used include;

• What are the opportunities in the Nigerian telecommunication industry?
• What are the major market challenges in Nigeria?
• What are the best marketing strategies?
• How do external organization factors affect this industry?
• What is the political and economic status of Nigeria?

Industrial Overview

Nigerian telecommunication industry owes its birth to colonial period when it shared telephone and electric services with the neighboring countries. Today Nigeria has over 108 companies of which 48 are licensed internet and communication providers. The democratic government of Nigeria has lowered its regulation to the industry that many companies are fighting to enter the industry.

The main communication provider of Nigeria for domestic and external telecommunication from 1985 has remained Nigeria Telecommunication Limited (NITEL) with several mushrooming private companies. The industry has seen a lot of development since 1993 when the government through Nigeria Communication Commission (NCC) lowered regulations for the private investors (Gershon 2001, p.23).

Literature Review

NITEL failed to provide effective communication services both locally and internationally in Nigeria. The company was experiencing poor management issues that rendered it unable to effectively operate (Clancy & Peter 2000, p. 67). Consequently, was operating under high cost with limiting universal coverage. It only had the Nigeria has only Nigeria Mobile Telecommunication Limited (M-Tel) as mobile cellular provider (Gershon 2001, p.23).

M-Tel coverage geographical was small with one switching center and large capacity to manage as a result the first companies to be licensed found Nigeria to be a very fertile trading ground (Husting 2010, 76). Most of these companies have ventured into mobile cellular phones services provision and internet services (Huang & Yingluo 2008, p.214).

Trading in Nigeria has the advantages of supportive government policies, large purchasing power and vibrant economic environment (Phillip 1996, p.117). However, political instability today plays a major hindrance in telecommunication investment (Ludicke 2006, p.119)

Research Methodology

This research was carried out through case study on the major market operators in Nigerian Telecommunication Industry. The case study was carried out over M-Tel, Galaxy Information Technology and Tel. Limited Accat and Accellon Nigeria Limited. This research method was selected based on its ability to give more reliable information across the growth of each of the organizations. Data were collected and recorded for each company before analysis and interpretation were made (Creswell & John 2009, p.9).

Discussion and Analysis

The information collected on telecommunication market in Nigeria that there is a potential growth opportunities in Nigerian Telecommunication industry.

This was shown by product, price, place, promotion, people, physical evidences and process data collected (Kerin, 2011, p.119). It was identified that the best marketing strategy is niche penetration. The research identified several loose points among the pioneers such as poor customer services, poor management system and lack of product differentiation (Kotler & Kevin 2009, p.34).

A lot of financial resources are required for promotion of products through the media and publication to reach as many customers as possible. Most of these companies work with low skilled and lowly paid employees. This is an opportunity for a company aiming at getting larger market share.

Such company need high skilled personnel and provides incentives as motivational factor. Strategically, most companies in Nigeria lacks good organization policies for them to achieve their full potential. Marketing policies should limit bureaucratic measures, which might causes delays during service provision (Keller 2002, p.56).

To manage Nigeria telecommunication market a company need to focus on changes in consumer tastes, competition system and economic dynamics. A company needs to undertake a lot of research to identify more market niches (Kotler & Gary 2008, p. 79). This has greatly attributed to the industry trend as shown.

Fig. 1 Telecommunication Industry Growth Trend in Nigeria

Niche marketing is not always easy for companies to execute; organizations need proper machinery for evaluating their decisions as well as advancing. This calls for unending research in the market needs as well as emerging trends. It is also recommended that the company should recruit experts that carry out close supervision on the customers’ need for identification of consumer satisfaction. This is the only sure way of gaining customers’ loyalty as well as expanding market segments in Nigeria (Rogers 2008, p.76).

It was realized that Porters Five Score Model and Value Chain were the best marketing models that can be applied in Nigerian telecommunication (Michael 1998, p.216). Additionally, companies need managers with well understanding of Nigerian market. This will be useful in managing organization processes, structures and outcomes. Good management body is also required for liaison roles in an organization since Telecommunication industry relies on several other bodies (Michael 1998, p.211).

Fig. 2 Porters Value Chain

Anticipated Problems

Nigerian telecommunication offers four main challenges global marketers. Political instability is a major for the investors. Consequently, competition is so stiff in the market that strong competition strategies are required. Acquisition of skilled labour is a problem as most companies are hunting them down. Finally, managing the diverse customers’ satisfaction brings a lot of challenges to many organizations (Luther 2011, p. 119)

Conclusion

The research on Nigerian telecommunication industry care was set into plan after thorough expert researches and evaluations. The market was analyzed and scanned all the possible factors that can affect our operation. Through this, a company can develop a strategic marketing in this market with high expectations of success. Apart from this, constant research is required to manage changes in the market that can be incorporated to produce better services as well as profits.

References

Adcock, D & Al Halborg, C 2001, Introduction Marketing: Principles and Practice, Routledge: London.

Alexander, C 2009, Strategic Marketing Management, Bright Star Media, Toronto.

Bertocci, D 2009, Leadership in Organizations: There Is a Difference Between Leaders and Managers, Havard, University Press Britain.

Brown, D 2010, Experiential Approach to Organization Development, Prentice hall, London.

Clancy, K & Peter, C 2000, Counter Intuitive Marketing, Random House Business Books, London.

Creswell, J & John, W 2009, Research design: qualitative, quantitative, and mixed methods approaches, Sage, Los Angeles.

Czincota, M 2009, Emerging Trends, Threats and Opportunities in International Marketing, Business Expert Press, New York.

Don, S 2005, “In the Mix: A Customer-Focused Approach Can Bring the Current Marketing Mix into the 21st Century”. Marketing Management, Routledge , London.

Gershon, R 2001, Telecommunications management: Industry Structures and Planning Strategies, Lawrence Erlbaum Associates, Mahwah, N.J.

Hakan, H 2004, Rethinking Marketing: Developing a New Understanding of Markets, John Wylliea’s, Southern Gates.

Hart, T & James, M 2005, Nonprofit internet strategies: best practices for marketing, communications, and fundraising success, Wiley, Hoboken, N.J.

Huang, W & Yingluo, W 2008, Global mobile commerce strategies, implementation, and case studies, Information Science Reference, Hershey.

Husting, S 2010, Improve Your Marketing to Grow Your Business: Insights and Innovations that Drive Business and Brand Growth, FT Press, New Jersey.

Phillip, K 1996, Outlines & Highlights of Marketing by Kotler, Academic Internet Ventura, Publishers.

Ludicke, M 2006, A theory of Marketing. Outline of Social Systems Perspective. Regine, Zimmer Frankfurt.

Luther, W 2011, The Marketing Plan, How to Prepare and Implement, Broadsway, New York.

Michael, P 1998, Competitive Advantage: Creating and Sustaining Superior Performance: With a new Introduction, Simon and Schuster, New York.

Rogers, E 2008, Diffusion of Innovation, Simon and Schuster, New York.

Kotler, P & Gary, A 2008, “Marketing defined”, Principles of marketing. London, Free Press.
Kotler, P & Kevin, L 2009, A Framework for Marketing Management, Pearson Prentice Hall London.

Keller, K 2002, Strategic Brand Management, Pearson Prentice Hall, London.

Kerin, H 2011, Marketing: The Core, McGraw-Hill/Irwin, New York.

Today, more than ever before, the business environment is characterized by a multiplicity of market structures that reflects how business is conducted in these markets. One of them is the oligopoly, a form of market structure where there is outright domination of a small number of sellers or suppliers, often called oligopolists (EconomyWatch, 2010).

Organizations in an oligopolistic market set their business strategies by critically evaluating how their close rivals will react rather than how customers will react, and are therefore largely seen as anti-customer and anti-competitive.

The few firms operating in a given market segment may increasingly differentiate their products, which may prove beneficial to some customers, but always come at a price (OECD, 1999).This is usually the case with firms operating in Australia telecommunication sector. It is the purpose of this paper to critically evaluate how such an arrangement affects consumers and the community as a whole.

Although competition laws forbid collusion between firms to increase prices, restrict product or service output, or divide markets, the oligopolistic nature of firms operating in Australia telecommunications market ensures that competitors set their prices through imitating their rivals, thereby harming the welfare of consumers (OECD, 1999).

The Australian Communications Authority (ACA), charged with the responsibility of regulating cellular, landline, internet, and cable telecommunication providers, is required by law to request these companies to publish projected nonbinding price targets as a precondition to allow healthy competition (Cutler, n.d.).

The telecoms providers, however, will go to great lengths to facilitate price collusion not only in Australia, but in other countries as well. In all this, the customers are at the receiving end since they don’t get value for their money as firms behave in the same manner.

There exist various models and graphical representations which firms in an oligopolistic market structure employ to come up with their prices. The Bertrand Model, for instance, operates under several assumptions to project prices (Harris, 2001). The model assumes that if there are two organizations in the market producing similar products, they are likely to produce the products at a marginal cost (MC).

As such, if the organizations select prices P_A and P_B for the similar products which can successfully substitute each other in the market such as airtime top-up, then sales are split evenly in an oligopolistic market if P_A = P_B. Therefore, according to the model, the only Nash equilibrium of the price of the airtime top-up product is:

P_A = P_B = MC

It therefore follows that none of the telecommunication firms competing under the above model will be in a hurry to change strategy since they are more likely to lose clients if the prices are raised (P>MC) or lose money on every product sold to customers if the prices are lowered (P

The Bertrand equilibrium is attained when P = Marginal costs of the products or services on offer (Harris, 2001). Such an oligopolistic model does not take the interests of the customers at heart since it is only concerned with how other organizations design and price their products or services

An oligopolistic market structure exercise high obstacles to entry (Png, 2002). This means that the firms operating in an oligopolistic market not only have a firm grip over the prices charged to customers, but they also limit entry of new firms into the market. This have obvious ramification on the customers since they are denied the freedom of diversity by the market structure (Sutton, 1991).

Indeed, the customers are forced to use nearly identical products as the companies in the telecommunication sector try to imitate and outdo each other rather than employing innovative and creative ideas to introduce new products into the market. On its part, the community may not benefit from the opportunities that are brought about by new entrants into the market such as employment opportunities and corporate social responsibility projects.

An oligopoly market structure implies a high extent of market concentration, meaning that a large percentage of the market is absorbed by the foremost commercial organizations of a country (Sutton, 1991). Such an arrangement, in addition to facilitating connivance among the firms, locks out other local players from active competition.

This is not good for the community as market forces must be seen to facilitate entrepreneurial spirit which brings choice to consumers. Lack of entrepreneurial spirit only serves to enhance mutual dependence of firms that is so prevalent in Australian telecommunication firms, and results in customers getting similar products with similar prices (Png, 2002).

In most occasions, the prices are set depending on the dominant organization in the oligopolistic market, a scenario called price leadership. In Australia, price leadership was largely evident when Telstra almost singlehandedly dominated the fixed line market. Price leadership arrived at using the above discussed Bertrand Model does not in anyway add value to customers.

List of References

Cutler, A (n.d.). ACA Compliance and Labeling Requirements. Web.

EconomyWatch (2010). Oligopoly. Web.

Harris, N (2001). Business Economics. Oxford: Butterworth-Heinemann OECD (1999). Policy Roundtables: Oligopoly. Web.

Png, I (2002). Managerial Economics, 2^nd Ed. Malden, MA: Blackwell Publishing.

Sutton, J (1991). Sunk Costs and Market Structure: Price Competition, Advertising and the Evolution of Concentration. Massachusetts Institute of Technology.

Organizational change is a structured driven process that creates the roadmap for growth. The growth and development of an organization are centered on the correlation between the objectives and the processes involved (Ahmad 2000). When the need for organizational changes arises, managers must focus on its employees, which are the agents of change. The research will study the impact evaluation of the inclusion of employees in decision-making during the management of change in the telecommunication sector in the Sultanate of Oman.

The study of the management of change in the telecommunication sector will focus on the inclusion of employees and the decisions taken by the employees during change management to analyze the value of the impact of change. The decision-making process during an organizational change requires careful implementation. The management can achieve success when decisions are taken with reference to other agents of change (Armenakis, Harris & Mossholder 1993). The impact of change in an organization will influence the growth of the organization. It will strengthen its market sales and boost productivity (Armenakis & Bedeian 1999).

The positive influences of organizational change motivate most organizations to implement change (Armenakis, Harris & Mossholder 1993). Thus, the value of the impact of employee’s inclusion in the management of change in an organization is significant. The assessment of an organizational change is measured by the successful implementation (Armenakis & Bedeian 1999). Thus, the model used for this evaluation comprises the inclusion of employees, and decision-making by employees.

These concepts influence the value of the impact of change. The concepts will be analyzed in the literature review. Each of the concepts will be evaluated based on the research questions in the literature review. The analysis will be used to provide an evaluation of change management in the telecommunication sector in the Sultanate in Oman. The conceptual model in figure 1 provides a set of questions for the literature review.

The impact of an organizational change can be productive when

1. The changes create positive impact on the organizational structure.
2. Communication between the management and the employees is cordial.
3. Employees accept, and adapt to the change in the organization without resistance.
4. The change provides increases the growth index of the organization.

The employees are the primary obstacles to organizational change and they determine the extent of success or failure of the change (Amiot et al. 2006). Managers try to manage the effect of change instead of actualizing the change in the organization (Armenakis & Bedeian 1999). This is caused by the obstacles of the change. Employee’s inclusion can reduce the obstacles to organizational change (Armenakis, Harris & Mossholder 1993). The model seeks to address the impact of employee’s inclusion in the management of change. To understand this evaluation, I will investigate the variables surrounding the inclusion of employees in decision-making during organizational change.

The strategic question for the literature review will be:

1. What are the feelings, attitudes, and perceptions of employees towards change?
2. What are the consequences of employee inclusion in decision-making on change projects?
3. How can the employees’ feelings, attitudes, and perceptions be useful in managing change in the organization?

References

Ahmad, A 2000, Organizational commitment versus organizational change: A comparative study of blue-collar and white-collar employees of saree manufacturing companies, Social Science International, Vol. 16 No 1 & 2, pp. 20-32.

Amiot, E, Terry, J, Jimmieson, L, & Callan, J 2006, A longitudinal investigation of coping processes during a merger: Implications for job satisfaction and organizational identification, Journal of Management, Vol. 32, pp. 552 – 574.

Armenakis, A & Bedeian, A 1999, Organizational change: A review of theory and research in the 1990s, Journal of Management, Vol. 25 No. 3, pp. 293-315.

Armenakis, A, Harris,G, & Mossholder, W 1993, Creating readiness for organizational change, Human Relations, Vol. 46, pp. 681-703.

Introduction

During the period of 1980s and 1990s, in both areas services as well as manufacturing tremendous growth have been seen in telecommunication industry. In this regard, every day new technologies are introduced in different markets such as mobile phone and telecommunication devices. However, technologies and inventions in this field vary from country to country. In this context, the United States has been considered as one of the pioneer nation who opens the field of telecommunication for communication purposes. Nevertheless, in the history of telecommunication, this sector in the year 2001 experienced some huge financial and non-financial crises. Fortunately, at present, telecommunication sector showing new signs of recovery of 2001 huge crises and developing new devices. In this regard, due to rising demand for 3-G infrastructure equipments such as WiFi and some internet access equipment telecommunication hardware producers working hard to cope with market products’ demand.

AT&T

The history of AT&T started with the history of telephone in the United States. AT& T was rooted in 1857 when Alexander Graham Bell invented telephone. The AT&T was the major company Bell systems, to provide telephone services. The Bell systems, the best service provider of telephonic services in the world, this system broke up into eight companies by the agreement between the AT&T and the U.S department of justice.

The period of 1984-1996 was a very successful one for AT&T to provide equipments as well as services in a competitive world. At present AT&T is a global services provider to government customers and enterprises.

Basic Service

AT &T provides services in two parts: business services and consumer services. Through a relatively large chain of service providing the AT&T provides telephone service to over 35 million customers who are residents of USA and Internet service through AT&T WorldNet and AT&T digital subscriber line (DSL) service to limited areas of U.S.

AT&T’s business services which the company thinks that its future rely on consists of providing global communication services to three million customers, ranging from small business to large corporations. The corporate clients are provided domestic and international voice service, domestic and international data and Internet Protocol (IP) services, networking services, domestic and international wholesale transport services.

Strategic Groups

Public relation is the main point to focus to communicate with the employee’s in order to improve understanding of the company’s goals and strategies, while increasing team strength and dedication towards the success of the company. AT&T and AVAYA have signed a pact to work together in providing services of IP telephony and contact center solutions for businesses and organizations of all sizes.

Macro-environmental Forces

The organization works within the bigger structure of the exterior environment that shapes opportunities and poses pressure to the organization. The external environment is basically a collection of compound, vastly changing and growing forces that results in the organizations’ capacity to provide services to its customers. Understanding the environmental conditions is very important for an organization because all the strategy decisions based on it. AT&T always keeps an eye on their external environment so that it gets profit from the besieged markets.

Industry Lifecycle

It takes the perfect people, perfect technology and a perfect vision to be the best and competitive company in the world. The AT&T has proved since 125 years. Providing best quality and no such service provider in the field AT&T has made its place in past decades. Its great customer services, Internet services and long distance voice services provider has made it a leader in telecommunication industry.

AT&T started in 1876 by the invention of telephone. Alexander Graham Bell and other partner who started the Bell telephone company in 1877 run it successfully. Initially Bell had monopoly over telephone exchange because of the copyright law it has, in 1984 its patent was over, the negative point which it had at that time was instead of competing with the newly born firms Bell started taking them to court saying that they infringe Bell’s copyright law, therefore by the introduction of other competitive firs like Verizon etc people who were using Bell services started to switch over to other companies who were offering better services at lower price level Also the new firms successfully provide services to smaller and rural areas where Bell does not operates.

Verizon

Verizon Communications Inc. situated in NEW YORK and integrated in Delaware, it was established on June 30, 2000. Verizon rise on the New York Stock Exchange to do business as a firm on July 3, 2000. The people who started the Verizon Company and put its roots were the main reason to make this firm to be the 21^st century competitive firm in the telecommunication industry. Its partners belong o the 19^th century business era and are still working with same pace and prosperity. The intervention of Government basically gave a lot space for this industry to progress. When Telecommunication Act on Feb 8, 1996 was declared the Faderal Law introduced many business world policies.

This good step worked as a motivating spirit for Verizon. GTE and Bell are the two big companies, which were the merger of Verizon till two years of its arrival in the market, later Bell get parted by the joint decision of all shareholders, 27 state regulatory commissions and the Federal Communications Commission (FCC), and clearance from the U.S. Department of Justice (DOJ) and various international agencies. Hence on April 3 2000 a new wireless product of Verizon was introduced in the market, GTE’s wireless products were merged with the AT&T and it became the nation’s largest wireless company with this technology.

Basic Services

Verizon communications was added to the Dow Jones Industrial Average in April 2004. Verizon now provides services in wireline and wireless technologies to over 100 million Americans; daily such a huge amount of people connects to the Verizon networks. By the end of 2005 the Verizon Company provides 48 million wire line access lines and more than 5 million broadband connections throughout the country. It provides services to 1.5 billion customers daily to make phone calls and trillions of bytes are transferred through their network daily with max efficiency and dependability.

Strategic Groups

On 14 Feb 2005, the Verizon company decided to merge with the MCI, Inc; in order to make Verizon able to provide converged communications, diversion and information globally. The mergers announced agreement on Oct 6, which was later, closed with the business of $8.5 billion in 2006.

Macro-environmental Forces

Verizon Company has approximately 250,000 employees around the world who are working and contributing in 140 countries. Verizon provides three types of services: Verizon wireless, Verizon landline segment (Domestic Telecom) and the video network service. An undeniable reason for competing in the corporate world is its CAB (Consumer Advisory Board), A board that represent external stakeholders, which consists of customer support groups and government officials. The board consists of 25 members which meet after certain time period to discuss many company issues regarding the marketing, customer services, policies etc. the CAB invites external and internal analysts to provide their opinion and suggestion related to the matter of quality, customer service, business and policies.

Recent Fact Sheet

Industry Lifecycle

Verizon Communications Inc., which has its headquarters at NEWYORK, is a big wireless and wire line provider in America to businesspersons, Government and wholesale customers. Verizon wireless network includes Verizon business, which consists of dynamic and flawless services to the people, and the Verizon converged communications, which provide quality transfer of data over fiber optic cable everywhere.

AT&T VS Bell-Analysis

Business customers are always ready to expect changes related to any factor of service they are using. The BELL and AT&T are the two big chaps of the US telecom service industry. The war between them is of services, price-levels, and quality and last but not the least of leadership. These two big chaps are heading towards the era of telecommunication giants, consisting a huge amount of customers as well as services. In short we can say that the list of services is expanding day by day but not alone it also includes the increment of price tags on each service for the customers.

AT&T and bell are also looking forward toward a future, which will be mostly dependant on wireless technology. The AT&T CEO uses the slogan nowadays that “We’re about to become a company with wireless at its heart”. Despite of this competitive e fact there are some other ground facts as well, the major local phone business is under attack by cable operators and new carriers, which are responsible of delivering, phone calls over Internet networks. Also he revenue from the business world is inactive.

The wireless technology is so rapidly growing that it is observed, every man and woman and child over 10 years of age owns a mobile phone and wireless technology is reaching heights.

During the last few decades, rapid inventions and deregulations have been seen in telecommunication industry. And most of the telecommunication organizations were privatized by government which shows a new wave of competition in telecommunication industry. In spite of innovations, domestic calls are still a noteworthy source of income for telecommunication companies such as at&t and Verizon. Besides domestic calls, “High-speed Internet access, which delivers computer-based, data applications such as broadband information services and interactive entertainment—is rapidly making its way into homes and businesses around the world. The main broadband telecom technology—Digital Subscriber Line (DSL)—ushers in the new era. The fastest growth comes from services delivered over mobile networks”. (The Industry Handbook, n.p.).

Conclusion

Wireless is the center of everything that’s happening in today’s world. May it be a businessperson, a student, and a company and no matter a big industry everyone has the requirement of this technology and is using it with same pace. In last few years it has grown so much that life without it cannot be imagined. In America only millions of people are connected through several service providing companies, which are working with dedication and competitive skills in the market. The two top most companies are AT&T and Verizon, which were first merged together but later on separated. Now they work independently and compete in every aspect as much as possible.

While there are some benefits there must be some drawbacks of being so addicted to wireless technology. One can’t survive without it in today’s world. Either you have to compromise on price-level or quality. If you need both the best place to go on is one of the above-mentioned companies.

Although sometimes it happens that the profit makers do not consider the customer’s ability to afford the price if it has been increase by the firm but still it is the part of the game. In spite of the fact that there are many other companies in the market, AT&T and Verizon maintain their own place they need 100% satisfaction from their customers and try to capture major part of the business. A million of dollars are spend by these big chaps annually to maintain their business and fulfill its requirements. Wireless technology in corporate world is mainly needed and makes sense. A better means of communication in any business leads to a better profit and best performance!

Works Cited

AT&T Corporation Company History 2007.

AT&T: Asia-Pacific: Media Center. 2007. Web.

AT&T Wireless and Verizon-Company Business and Marketing – Brief Article. CommunicationsWeek International (2001). Web.

AT&T: Strategic Partners: AT&T and Avaya. 2007. Web.

AT&T: History. 2007. Web.

Mehta S N. AT&T and Verizon: Wireless at heart. Traditional telcos are scrambling to win the wireless market. But can they really connect with corporations? (2007).

The Industry Handbook – Telecommunications. 2007. Web.

Verizon | Investor Relations | Company Profile | Corporate History | Recent Verizon History. 2007. Web.

Definition of CSR

According to Baker (2004), corporate social responsibility (also known as corporate citizenship, corporate conscience, sustainable responsible business, or social performance) simply refers to “how companies manage the business processes to produce an overall positive impact on society.”

In this definition, Baker emphasizes that companies need to fundamentally answer to two major aspects of their operations. Firstly, they must be answerable about the quality of their management and secondly, they must answer about the nature of their operations and the impact to the society.

Different regions have their own customized understanding of CSR based on the differences in occurrences and endeavors in their areas. For example, in USA, CSR is mostly viewed in terms of a “philanthropic model” where companies conduct their businesses with the aim of making profits and contributing to charitable causes as a showing that they are responsible in the corporate world (Baker, 2004).

In Europe, the concept of the ‘end justifying the means” allegedly opined in USA’s CSR practices, is replaced by the exact opposite where “the means justifies the end” (Lattemann et al., 2009). Studies in Africa and Australia are still inconclusive because only a handful of researches have been done (Idemudia, 2011).

In UAE and Asia, however, studies show that there is a hybrid of the US and European Models thus different countries in these regions viewing CSR differently (Ihlen et al., 2011).

Notably, all these definitions assert that stakeholders and shareholders play a vital role in CSR practices of any industry. It is with this in mind that the CSR practices in the telecommunications industry (especially in the UAE region) will be discussed.

Brief Background of CSR Practices

Just like in most industries, CSR in the telecommunications industry can be historically categorized into two factions which are traditional CSR and modern CSR.

According to Jamali (2007), in the traditional era, a scholar named Carol l asserted that industries showed their corporate social responsibility to stakeholders and shareholders by conducting their businesses in ways that were economically, legally, ethically, and discretionarily viable to their industries.

However, as time went by, Jamali says that the traditional perception of CSR was replaced with a modern one where CSR was majorly viewed economically with companies using it to impose their dominance while their customers using it as a ladder into the economic benefits from these companies.

More specifically, Schutter (2008) says “although its roots are of course older, the concept of CSR emerged in the recent official EU discourse with the Conclusions of the Lisbon European Council of March 2000.”

The CSR era that began in the mid 1990’s and evolved to a formidable venture in the early 21st century (starting with this EU meeting) is what most researchers refer to as the modern CSR era (Jamali, 2007).

Today, CSR has undergone several changes with the terms being used variably, as was earlier mentioned. In the telecommunication Industry, especially in UAE, CSR encompasses activities such as supporting education, raising awareness on various issues such as sicknesses and environment conservation, and supporting the needy people in communities (Schutter, 2008).

Approaches to CSR Practices

Theoretically, there are several ways in which scholars approach CSR practices. However, in the industrial world, Tang and Li (2009) say that there are “three distinctive approaches to CSR: CSR as ad hoc philanthropy, CSR as strategic philanthropy, and CSR as ethical business conduct.”

These approaches are the ones that relevantly apply to CSR in the telecommunication industry in UAE and thus will be our main focus.

As an ad hoc philanthropy, emphasis on CSR is laid on “discretionary rationality, i.e. corporations need to contribute to the welfare of society” (Tang & Li, 2009).

In the telecommunication industry, involvement in CSR is typified by engagement in activities such as sports, education, disaster relief, cultural programs, poverty alleviation programs, and health issues.

The strategic philosophy approach is almost similar to CSR as ad hoc philanthropy except that, in the strategic philanthropy, themes engaged in are mostly based on specializations by the involved companies (Tang & Li, 2009).

For example, a company concerned with disability can contribute towards education of disabled children. Such initiatives go beyond normal charities as the victims and company both end up benefiting (Jamali, 2007).

In the ethical business conduct approach, the ideologies are “based on economic, legal and ethical rationalities” (Tang & Li, 2009).

In other words, the major issues dealt with here entail ethical business practices such as good handling of customers, fairness in treatment of employers and professional ethics in the engagements with shareholders or even stakeholders (Neu et al., 1988).

More specifically, the ethical business conduct approach encourages transparency and accountability of company operations (Poitevin, 1990).

In most cases, CSR as an ethical conduct is facilitated through industry policies. The advantages and disadvantages of these approaches in the telecommunication industry are given below.

Importance/Advantages of CSR Practice

Most of the advantages of CSR have been partly mentioned in the discussions above. However, in summary, CSR offers the following advantages:

• CSR is recognized widely as an effective way of managing threats to organizational legitimacy.
• CSR creates an important social capital that helps societies to adjust to harsh realities while encouraging good interrelations among various people.
• Helps in attracting long-term capital and favorable financial conditions.
• Helps in raising awareness, staff motivation and attracting new talent.
• Encourages utmost responsibility by companies and people in various aspects.
• Facilitates transparency and accountability by organizations.
• Encourages innovation and creativity while enhancing one’s reputation.
• Encourages economic development and environmental conservation.
• Accentuating social stability and general well-being of the concerned populace.

Demerits, Challenges and Limitations of CSR Practices

On the downside, the following disadvantages have been found:

• International corporations are often faced with issues like trade barriers which limit full efficacy of CSR initiatives.
• If mismanaged, CSR can be a very dangerous tool for negative manipulation by those in power.
• Acclimatizing to various laws, ethics, regulations and rules can be quite difficult—especially for international companies.
• The presence of various approaches to CSR makes it a viable subject for misinterpretations.
• Creating a working framework for implementation of CSR practices can be quite strenuous and costly.
• Some people or companies tend to be overly and non-deservingly favored by the goodwill from CSR practices.

Conclusion

In conclusion, it is worth stating that change is a gradual process and whatever steps taken in the right direction always add up to something significant. Commendably, a lot has been done by the telecommunication industry in UAE to improve its CSR endeavours.

However, there is still more that needs to be done in order for them to find ways of strongly sustaining itself and staying devoid of its challenges.

References

Baker, M. (2004). Corporate social responsibility – what does it mean?. Web.

Idemudia, U. (2011). Corporate social responsibility and developing countries: moving the critical CSR research agenda in Africa forward. Progress in Development Studies, 11(1), 1-18.

Ihlen, Y., Bartlett, J., & May, S. (2011). The handbook of communication and corporate social responsibility. New York: John Wiley and Sons.

Jamali, D. (2007). The case for strategic corporate social responsibility in developing countries. Business and Society review, 112(1), 1-27.

Latteman, C., Fetscherin, M., Alon, I., Li, S., & Schneider, A. (2009). CSR communication intensity in Chinese and Indian multinational companies. Corporate Governance: An international Review, 17(4), 426-442.

Neu, D., Warsame, H., & Pedwell, K. (1998). Managing public impressions: environmental disclosures in annual reports. Accounting, Organizations and Society, 23(3), 265–282.

Poitevin, M. (1990). Strategic financial signaling. International Journal of Industrial Organization, 4, 499–518.

Shutter, O. D. (2008). Corporate social responsibility European style. European Law Journal, 14(2), 203-236.

Tang, L., & Li, H. (2009). Corporate social responsibility communication of Chinese and global corporations in China. Public Relations Review, 35, 199-212.