Egycel Telecommunication Entering the Cuban Market

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Introduction

Considering the intensity of competition characterizing Egypt’s telecommunication industry, it is important for Egycel Telecommunication to consider formulating effective expansion strategies. This will contribute towards the firm attaining its profit maximization objective. One of the ways through which the firm can attain this is through the incorporation of the concept of internationalization. However, a comprehensive cost-benefit analysis should be undertaken in the process of determining the best investment destination. This will aid the firm in determining the probability of the firm succeeding in the selected investment destination. This is due to the fact that effectiveness in undertaking the internationalization process is affected by the external environment. One of the investment destinations considered by the Egycel Telecommunication management team is Cuba. This results from the fact that Cuba has undergone rampant developments in the recent past. These changes result from the increased incorporation of various economic strategies by the government such as economic liberalization. One of the economic liberalization policies that will affect the telecommunication industry relates to the announcement by the president to lift the ban on cell phones. Despite these changes, Egycel Telecommunication should not expand its operations by entering the Cuban market.

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SWOT Analysis

Strengths

Egycel Telecommunications has been in operation for a number of years. As a result, the firm has been able to develop a strong financial base. This definitely increases the effectiveness and efficiency with which the firm executes its expansion strategy. In addition, Egycel Telecommunication has managed to develop an edge in venturing into the international market. This results from the fact that the firm has a highly experienced staff.

Weaknesses

Despite these strengths, Egycel Telecommunications is not well conversant with the Cuban telecommunication industry. This represents a challenge to the firm in marketing its products in the Cuban market.

Opportunities

Increased commitment by the Cuban government to liberalize its economy presents an opportunity for Egycel Telecommunication to conduct foreign direct investment into the country. The greatest opportunity relates to an announcement on the lifting of a ban on cell phones by Cuban president Raul Castro.

Threats

The success of firms in the telecommunication industry depends on well-established communication infrastructure. There is a low probability of the firm succeeding within the Cuban Information Communication Technology (ICT). This results from the fact that the country’s ICT industry is not well developed due to minimal improvement to the industry by Fidel Castro’s regime. This is evident from the fact that the country’s telecommunication infrastructure is ranked very low within the Caribbean region and globally. In addition, the ICT infrastructure is not well linked to the international market. International collaboration is a key element for the success of firms operating on an international scale. Due to limitations in the ICT industry, the firm will experience a challenge in undertaking international remittances.

Minimal development within the country’s ICT industry has limited the country’s network coverage. This means that the probability of Egycel Telecommunication succeeding in Cuba is minimal.

Cuba is also rated to be amongst the low-income countries in the world. This results from a low rate of economic development which culminates in a reduction of the individual’s disposable income. As a result, the purchasing power of Cubans is relatively low. In addition, consumption of mobile phones in Cuba is relatively low. This is due to the fact that most of the Cubans consider mobile services to be a luxury.

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According to a recent report by Planas (2010, para.3), foreign investment in Cuba is not favorable. This results from the fact that foreign companies are not free to directly invest into the country. This arises from the country’s political structure. Most investments within the country are controlled by the government. As a matter of fact, foreign companies are required to form partnership with local companies in venturing into Cuban market. The Cuban government has adopted this strategy in order to guard its sovereignty. In additions, firms investing in Cuban market face a trade embargo that is instituted by US government on the country.

Cuban government also limits expansion by foreign and private firms which have invested into the industry. This means that by Egycel Telecommunication will be limited in acquired a large market share within the country.

Cuban culture

By venturing into Cuba, the firm’s operations will be affected by the country’s culture.

High level of individualism

Cuban culture can be defined to be individualistic. This is mostly common amongst the youth who are dissatisfied with the current regime. As a result, the youth are ready to involve themselves with illegal activities in their consumption pattern due to high level of dissatisfaction. This will have a negative effect to the firm since there is a high probability of the government instituting strict rules to the communication industry in an effort to control it. In addition, the firm will face a challenge in the process of marketing its products due to this sort of culture.

Masculinity versus femininity

The Cuban society is more feminine in nature. As a result, the society puts more emphasis on the quality of life and relationship. As a result, in entering the industry, it will be paramount for the firm to ensure that it provides value to the society.

Long term orientation

In addition, Cuban society is characterized by being more long term oriented. As a result, individuals focus on the future as compared to the past or present. The country’s long term oriented culture enables the society to value attitude and actions which have the capacity of affecting the future.

Power distance

Cuban culture is characterized by a high power. As a result, the society expects those in leadership to give orders. This means that use of participative leadership will be perceived to depict incompetence. Upon venturing in Cuba, Egycel Telecommunications will have difficulty in relation to the local workforce. This is due to the fact that Cuban society does not appreciate management by objective or other types of participative leadership.

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Uncertainty avoidance index

Due to the strict regulations instituted by the Cuban government, a culture of uncertainty and ambiguity has been developed. As a result, Cuban citizens are uncomfortable with the system due to limitation of consumption freedom. This increases the probability of country witnessing social unrest in the future. This means that there is a high probability of Egycel Telecommunications losing its investment in Cuba.

Alternative expansion

Egycel Telecommunication should consider expanding its operation to China and United Arabs Emirates (UAE). Over the past few years UAE and China have witnessed an increment in their economic growth. This has resulted from growth in their oil industry Li, 2005, p.45). As a result the citizens purchasing power have been enhanced. In addition these countries have well developed ICT infrastructure (Free Trade Zone, 2010, para.2). This means that there is a high probability of the firm succeeding.

Conclusion

From the above analysis, the probability of the firm succeeding in the Cuban market is low. This is due to the fact that the country’s ICT industry is not well developed. In addition, there are a numerous external challenges that the firm faces.

Recommendation

  • The firm should consider the challenges presented in Cuban telecommunication industry before venturing into this market.
  • Considering the numerous challenges, the management team should not consider venturing into Cuban market.

RE: Staff Motivation in Cuba Market

In order for Egycel Telecommunication to succeed in the Cuban market, staff motivation will play a significant role in an effort to attain a competitive advantage. A comprehensive staff motivation program will be utilized. The plan will be attained by considering a number of actions. This result from appreciation go Theory Y concept of motivation as stipulated by Douglas Mc Gregor. The theory asserts that that employees are motivated by various needs.

Delegation of tasks

In the course of operation, such as marketing, the firm’s employees will have the freedom integrate marketing strategies that they consider as effective in executing their duties. This will be attained by delegating tasks to the employees. As a result, the employees will have a responsibility in executing their duties. Delegation of tasks to the employees will result into employee development. This is due to the fact that they will have an opportunity to formulate operational strategies on their own. Delegation of tasks to the employees will result from trusting the employees in their duties and expecting the best.

Training

In order to integrate a high efficiency in their operation within the international market, a comprehensive training program will be integrated. This will ensure that the employees are conversant with the changes that occur within the external environment. In addition, training will contribute towards an expansion of their skills. In marketing the firm’s product the Cuban market, it will be ensured that the employees in the firm’s marketing department are conversant with the country’s culture. This will be undertaken by training the employees on the marketing concepts which are applicable to this market. Through training, it will be possible to minimize the challenges that the employees might face in the course of executing their duties.

Reward system

To increase the level of their motivation, it will be ensured that rewards are linked to the employee’s performance. Performance evaluation will be attained by conducting appraisals from time to time. The reward system will integrate both positive and negative elements. The positive elements will consist of recognition and promotion. On the other hand, negative reward system will entail reprimanding negative behavior. In addition, reward system will also entail employees progressing within their salary scale. This will be attained upon attainment of key competencies which will support the firm’s international expansion.

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Job design

In an effort to ensure that the employees are motivated in the course of executing their duties, an effective job design will be integrated. Social technical approach of job design will be integrated. This will be attained by considering the diversity exhibited by the employees. Some of the considerations which will be emphasized include their behavioral styles, habitual attitudes, relationships and values. Job design will be attained by defining machinery, physical arrangement, processes and procedures involved in executing tasks. This will contribute towards a reduction in the level of possible job dissatisfaction. In addition, the employees will be motivated by eliminating dissatisfaction that might result from challenges of assigning a higher responsibility.

Reference

Free Trade Zone. 2010. Foreign investment in UAE. (On-line). Web.

Li, J. 2005.Investing in China: the emerging venture capital industry. (E-book). London: GMB Publishing. Web.

Planas, R.2010. Investment climate in Cuba still unfavorable to US, experts say. (On-line). New York: News Dispatch. Web.

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BusinessEssay. (2021) 'Egycel Telecommunication Entering the Cuban Market'. 9 December.

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BusinessEssay. 2021. "Egycel Telecommunication Entering the Cuban Market." December 9, 2021. https://business-essay.com/egycel-telecommunication-entering-the-cuban-market/.

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