Etisalat: Strategic Management

Introduction

It could be stated with certainty that the telecommunication industry has experienced continuous growth in recent decades. The development of telecommunication technologies is one of the primary factors that influenced the emergence of the current globalized world order. As the process of globalization continues, new challenges are imposed on the industry of telecommunication in terms of creating more diverse, extensive, affordable, and reliable means of communication across the world (Aremu 7). Particularly, organizations in the sphere of telecommunications are subject to the steadily increasing demand from customers, both in domestic and international markets. In these circumstances, the competition is highly increased, and the need for comprehensive and sustainable strategic management is evident.

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For the purposes of this paper, Etisalat is chosen for the analysis. In general, this company is the major telecommunication company in the United Arab Emirates market. As stated by Majumdar and Asgari, “The UAE telecommunications sector is among the strongest and most advanced in the world and was served by a monopolist provider, Emirates Telecommunications Corporation,” which is another name of Etisalat (146). Additionally, the organization is expanding to the markets of the Middle East and Asia.

Established in 1976, the company continues to provide telecommunication services to a considerably large number of customers. For a significantly long period of time, Etisalat dominated the UAE market, being virtually the single company in the telecom sector, thus operating a monopoly. As mentioned by Ameen and Willis, “in the UAE, Etisalat is still the dominant and major player in the telecommunication market” (6). The company is diversified considerably as its “operations exceed the UAE to 16 other countries (even outside the Arab region),” and they also “extend beyond mobile operations to fixed lines and other services” (Ameen and Willis 6).

However, in the recent decade, the position of the company in the market is threatened by the entrance of new organizations within the same industry, increased competition, advanced customers’ demands, and the necessity to be in compliance with the global standards in terms of technology and strategic management.

Therefore, the purpose of this paper is to conduct a thorough analysis of the Etisalat company. First of all, it is essential to identify what issues the company is facing currently, including strategic, tactical, and operational factors. Secondly, the paper will provide a more detailed, specific, and comprehensive context of Etisalat’s current circumstances, both external and internal (Majumdar and Asgari 147). Then, it will be possible to dwell upon the third stage of the report development, which is the elaboration on alternative strategies and recommendations about their implementation. Thus, a comprehensive conclusion will be built on the basis of the conducted analysis.

Issues Presently Confronting the Organization

Strategic Issues

It is appropriate to start the discussion of the problems confronting Etisalat from the observation of the issues existing on the strategic level as they define the overall direction in which the organization is going. Given the position of Etisalat as the telecommunication market leader in the UAE, one can state that the highest and most general strategic priority for the company is to preserve its position in the market and successfully expand to other markets (Ameen and Willis 6). This goal could be subdivided into more particular objectives.

These objectives could be formulated as answers to the following three questions:

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  1. what the organization does,
  2. who are its customers, and
  3. how can the company improve the currently existing aspects?

It is apparent that Etisalat is operating in the telecom sector, and thus it provides telecommunication services. The issue here is that the development and advancement of technologies such as mobile Internet and the Internet of Things imply that companies in the identified sector should implement the latest technologies (Ameen and Willis 8). Accordingly, it could be stated that Etisalat is not sufficiently complying with the contemporary standards of quality and technological improvement. Additionally, the competition in the telecom sector is steadily increasing, and this is also an important strategic issue for Etisalat.

Etisalat primarily serves customers in the markets of the Middle East, Asia, and Africa. However, it is of high significance to consider customers from other countries in order to expand successfully. Also, the importance of continuous improvement of the customer services in already occupied markets is one of the critical priorities. Concerning the last question, it is possible to state that there are several approaches to the improvement of the overall performance of the company under consideration (Ameen and Willis 7).

First of all, comprehensive strategic planning, which considers the context of the current trends in the domestic and international markets, is essential. Secondly, the efficient implementation of the latest technologies is also of high importance because it would add to the competitive advantage of Etisalat. Thirdly, attention to customer service and human resource management is crucial. In general, it is apparent that such a market leader as Etisalat would experience strategic issues due to its high position in the market. Therefore, it is critical to address these issues appropriately in order to preserve and gain the company’s prominence in the market.

Tactical Issues

Tactical goals and issues traditionally relate to the short-term period of the company’s functioning. Usually, a period of a year is considered to be the appropriate range for the development of tactical goals. Accordingly, the tactical aspect of the company’s strategic management usually includes the planning of actions related to particular departments of the organization, such as marketing, production, personnel, implementation of innovations, and so on.

Regarding the case of Etisalat, it is of high importance firstly to mention the aspect of marketing. It is crucial for the company to implement efficient, aggressive marketing in the short-term run in order to prevent their customers from shifting to competitors (Al-Harthy 297). Accordingly, since the shift cost is considerably low for customers in the telecommunication sphere, it is essential to build a strong company image that would enhance customer loyalty.

The second aspect that is crucially important in the context of tactical planning is the implementation of business-level strategies. Among the methods by which Etisalat can improve its tactical advantage, it is possible to mention product differentiation as the most suitable approach. For example, the cost differentiation method would not benefit the company since it will not allow Etisalat to establish premium prices, which could lead to decreased profits and the loss of competitive advantage (Al-Harthy 298). On the contrary, the product differentiation approach will ensure that the company is paying particular attention to maximizing the positive experience of their customers. The provision of high-quality services and products is crucial for increasing customer loyalty, which would grow regardless of the price.

Therefore, on the basis of these assumptions, the tactical issues confronting the company can be formulated. Firstly, it is a necessity to invest more in marketing due to the fact that it is one of the most efficient methods of gaining the customers’ attention, preventing the existing customers from shifting to competitors, and attracting new subscribers. Secondly, the issue of production is also of high importance as the advancement of technologies creates a vast range of devices and services, which are desired by the customers (Kovacs 10). Therefore, Etisalat is facing the challenge of investing more in the application of new products and services. Product differentiation strategy is the highest priority in this area of concern.

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Operational Issues

The operational level of the company’s strategic management represents the process of connecting goals from the strategic level with particular objectives and issues on the tactical level. Accordingly, in order to develop an understanding of the appropriate operational approach, it is essential to answer the following set of questions. Firstly, what is the current position of the company, and which position the company aims to hold in the long-term run? Secondly, the company’s management should comprehensively understand which set of activities will ensure that the company achieves its position. Thirdly, how the progress toward the overall goal will be measured?

Concerning the aspects that were discussed above, it is possible to develop the following answers regarding the operational level of Etisalat. As it was identified in the first subsection, Etisalat holds the position of the biggest telecommunication provider in the UEA market, and it also has significant weight in other the Middle East and Asian markets (Kovacs 13). The ultimate goal of the company for the long-term period is considerably evident: it is essential to overcome the growing competition in the market and expand to new markets successfully. The set of activities that would ensure that the company achieves its strategic goal were formulated in the second subsection. These tactical objectives should be performed in the short-term run, year by year.

The primary tool for measuring the success of the company’s progress towards its ultimate goal could be annual assessments and reports. They would estimate the performance variables of Etisalat in order to show clearly what is implemented sufficiently and what needs to be improved (Kovacs 14). Accordingly, the primary operational issue that Etisalat can face is the insufficient work of the company’s analysts.

Conceptual Factors Relevant to the Issues

Such conceptual factors as mission, vision and values are critical for the proper understanding of the company’s position in the market and the perspective for its growth and development. As Etisalat is the largest telecommunication company in the UAE, it is apparent that its mission states as follows: to provide customers with the services of the highest quality in the sphere of communication (Ahmad Alkuwaiti 22).

It is appropriate to suggest that this mission statement is an integral part of the company’s ultimate strategic goals. Vision as the third conceptual factor is directly linked with the company’s mission since vision could be described as the view of the world in which the company’s mission is implemented successfully and continuously.

Thirdly, considering the values of the company, the following aspects could be mentioned. The company’s official website states that customer-centricity is the primary value in Etisalat. This value is described as the willingness to give customers the highest priority by providing them with a superior end-to-end experience. Also, such values as collaboration, agility, and empowerment are listed on the website. The collaborative approach is valued in the company because its strategic objective of expansion to foreign markets requires Etisalat to have efficient communication with business partners and suppliers across the world (Ahmad Alkuwaiti 23).

Agility is another vital value as it represents the company’s openness for changes and adaptation to increasingly changing conditions of the modern telecommunication industry. Empowerment is also an important aspect because it is essential to give both employees and customers the power to perform to their maximum extent.

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Relevant External and Environmental Factors

Arguably, the most suitable and efficient approach to conducting the analysis of relevant external and environmental factors is Porter’s Five Forces framework. It is well-recognized as a comprehensive and reliable method of determining the company’s position in the market through the investigation of external forces that influence the organization’s performance. Also, the results of such analysis can significantly affect the decision-making process in the company. Therefore, this section will dwell upon the discussion of each of the five components of Porter’s framework.

Firstly, it is appropriate, to begin with, the observation of the rivalry among established companies as it appears to be the most relevant factor for Etisalat. As it is mentioned by Ameen and Willis, “the telecom market in UAE is a duopoly between two major companies” (6), Etisalat and Du. Du is a relatively new company as it was established in 2007. Despite the fact that Etisalat still holds the position of the largest organization in the telecommunication industry in the UAE, the entrance of Du into the market significantly changes the balance of powers. Due to the fact that only two large companies compete for customers in the telecom sector, it is apparent that rivalry is immensely intense.

As Du succeeds at providing services and products that are attracting customers (including the ones that were previously served by Etisalat), the company under analysis has to put large investments in order to compete with the new company in the market (Ameen and Willis 8). This factor appears to be the most important within the framework as it is appropriate to state that rivalry among the existing companies is immensely intense.

Secondly, it is critical to discuss the risk of entry by potential competitors. The importance of this aspect could not be overlooked as Du’s entrance to the telecommunication market exemplified the opportunity for other companies to successfully compete with the organization, which only two decades ago held a virtual monopoly in the UAE market (Ameen and Willis 10). Therefore, the entrance of potential newcomers to the domestic market should be considered by Etisalat.

Secondly, the international threat of competitors’ entry should also be mentioned (Ameen and Willis 11). Despite the fact that the UAE government puts some restrictions on the operating of foreign companies in the telecom sector, the situation might be changing soon because the globalization process would force the UAE to allow international mobile companies to operate in its market. Accordingly, Etisalat should also consider the competition on the international level. Therefore, the risk of entry by a potential competitor is high.

The next aspect of Porter’s framework is the bargaining powers of buyers and suppliers. Regarding the power of buyers, it is possible to observe that Etisalat was the single telecommunication provider in the UAE for a considerably long time, and thus it was able to develop a huge customer base. It is evident that in the circumstances in which a company virtually holds the monopoly in the particular market, it is very difficult for customers to have any impact on the organization.

With the entrance of Du to the market, the situation changed considerably (Ameen and Willis 12). Despite the fact that customers can choose only between two companies, it is important to consider that the switching cost in the telecommunication sphere is low (Ahmad Alkuwaiti 24). Therefore, if Du succeeds in implementing efficient marketing campaigns that are supported by advanced customer services, Etisalat could experience pressure from its customers. Accordingly, the bargaining power of buyers should be marked as a medium in this situation.

Further, the bargaining power of suppliers should also be mentioned. Arguably, this aspect of the framework can be considered as the least threatening for Etisalat. The magnitude of Etisalat as an organization is immense, and thus it has significant bargaining power over its suppliers. Even though Du’s entry into the market changed the balance of powers in terms of customer services, the aspect of supply was not considerably affected by this event. Therefore, the bargaining power of suppliers is considered to be the lowest among other factors within the framework.

Lastly, the aspect of substitute products should be discussed. In the context of this factor, Etisalat holds a relatively sustainable position. The company under consideration is producing the full range of telecommunication products and services, which ensures their position as the market leader. What is more important, Etisalat has a highly diversified and well-executed production line (Ahmad Alkuwaiti 23).

Accordingly, even though Du is threatening the company by gaining a competitive advantage in terms of aggressive marketing and lower prices for the same services and products, it could be doubted that Etisalat would lose benefits because of the substitution of their product. Having such an efficient and powerful production system, Etisalat is able to implement services and products that their potential competitors might bring to the market. Also, the company under consideration is known for its high-end production. Therefore, the risk of product substitution is not critical for Etisalat.

Relevant Internal Factors

Organizational Structure

Considering the fact that the company has operated in the telecommunication market for more than 40 years, it is appropriate to observe that its organizational structure is well-established. However, in the context of the issues that the company is currently confronting, it is possible to suggest several factors that should be improved in terms of structural effectiveness. Primarily, the extension of the company and its objective to expand to other countries’ markets requires significant changes in the structure. It has to be more diversified and flexible in order to operate in foreign markets efficiently.

Also, as the company experiences increased competition in its domestic telecom sector, it is also critical to change the organizational structure in order to adapt to the changing market conditions (Majumdar and Asgari 146).

Accordingly, the strengthening of the company’s management is required because it is crucial to respond to the emerging challenges and issues in a comprehensive and timely manner. In general, the organizational structure of Etisalat could be described as significantly efficient as the company still holds the position of the market leader. However, the implementation of several improvement programs to successfully meet the current issue is critical.

Organizational Processes

Regarding the organizational processes, one can observe that they are directly connected with the organizational structure. As of now, Etisalat is struggling with building a successful strategy for efficient competing with Du, which is the company’s primary (and, currently, the only) competitor in the domestic market (Majumdar and Asgari 146). As it is stated by Kovacs, the contemporary trend in the telecommunication sector requires the companies “to bring strengthened consumer rights by achieving the reinforcement of competition between operators involved in telecommunications” (15).

Also, companies in the telecom sector are encouraged to invest more in innovative infrastructures. For example, this goal could be achieved by making radio spectrums more accessible for strengthening the security of wireless broadband services (Kovacs 15).

On the basis of these assumptions, one can conclude that the organizational processes in Etisalat are subject to continuous changes, both in the short and long-term run. Additionally, the investment in marketing efforts is also an important process within the company under discussion. As Etisalat is going through structural changes invoked by the increased competition in both domestic and international markets, the changes in organizational processes are crucial for the company’s success.

Human Resource Management

Human resource management is a particularly important internal factor for Etisalat. It is apparent that the company’s performance and overall success are built on the cumulative effect of the sufficient work of the organization’s employees. Therefore, the implementation of suitable human resource management strategies is drastically important for the company in such a position as Etisalat. Regarding this topic, it is appropriate to mention the study by Ahmad Alkuwaiti. In their article, the authors dwelt on the investigation of the workplace environmental quality factors along with the analysis of the job satisfaction level among the employees of the Etisalat company. Three key factors were considered in the study: visual privacy, acoustical privacy, and social interaction (Ahmad Alkuwaiti 24).

According to the results of the study, both visual and acoustical types of privacy were found to be important for the employees of Etisalat, with greater value placed on the acoustical type. Social interaction has a medium effect on the level of job satisfaction, as the authors argue. In the concluding part of the study, Ahmad Alkuwaiti recommends implementing some architectural changes in Etisalat in order to improve the company’s workplace environmental quality (103). Therefore, it is possible to observe that the human resource management in Etisalat needs further improvements in order to enhance the level of job satisfaction and performance rates among its employees.

The Strategic Intent of the Organization

Based on the conducted analysis of the external and internal factors related to the organization under consideration, as well as emerging strategic, tactical, and operational issues, it is appropriate to formulate the strategic intent of Etisalat. Overall, the strategic intent could be described as the direction in which the company is heading. Accordingly, the strategic intent of Etisalat is largely determined by the fact that it is the leading company in the telecommunication market that has to preserve its top position and sustainably grow in the future. While the company’s performance, as well as established brand image and high levels of customer loyalty, ensure a stable position in the domestic market, in the continuously globalizing world, the changes could occur quickly (Kovacs 16). Thus, Etisalat should focus on gaining a competitive advantage and excellence of its services and products.

Considered Alternative Strategies

The latter part of this report is dedicated to the development of alternative strategies of the company’s development that could be proposed and successfully implemented by Etisalat’s management. In order to create an efficient alternative strategy, it is possible to refer to the study by Kovacs in which the author makes several recommendations for the improvement of the telecommunication sector in the UAE.

Among these recommendations, it is important to mark the most relatable ones for this report. Particularly, Kovacs suggests that increased competition would increase the overall development of the telecom sector in the UAE (26). Also, he states that Net Neutrality is also an important aspect to consider (Kovacs 26). Additionally, Kovacs mentions that the acquisition of knowledge and investment in human resources is crucial (12).

Therefore, the alternative strategy that is proposed in this report is, in general, to improve the organization internally. The rationale behind this suggestion is as follows: since Etisalat holds a relatively sustainable position in the telecommunication market, it is significant to focus on the advancement of its internal structure as well as organizational processes. Thus, the company will build a stronger and more comprehensive, and sustainable structure that will ensure Etisalat’s success in the future.

Recommendations for the Implementation of Particular Actions

Investigation of Consumer Purchase Behavior

As it is indicated in the scholarly work by Aremu, the importance of consumer purchasing behavior, which includes such factors as the product brand, taste, personal income, and price, could not be overlooked. According to the researcher, the investigation of how consumers behave in the market and what influences their decision is crucially important for the development of efficient business strategies (Al-Harthy 296). Therefore, the first recommended action to implement is the creation of a specific team that would investigate consumer behavior in the markets in which Etisalat is planning to enter. Thus, the company will have a preliminary advantage when it actually enters a foreign market.

Knowledge Acquisition

Secondly, the aspect of knowledge acquisition is highly important. As it is indicated in the study by Al-Harthy, significant knowledge acquisition obstacles exist in the telecommunication industry in the UAE. According to the author, the human resources factor is the most important and evident obstacle for efficient knowledge acquisition (Al-Harthy 297).

Therefore, it is recommended to implement an internal training program for managers that will ensure that they are in compliance with the current standards of knowledge in the spheres of telecommunication and business. It is evident that in the contemporary world, the value of knowledge is increased significantly due to the fact that the emergence of new facts and concepts is happening at an increasing pace. Therefore, the appropriate training program that increases knowledge acquisition skills among the employees of Etisalat will ensure that the company gains the competitive advantage steadily.

Investment in Human Resource

The study by Ahmad Alkuwaiti has already been mentioned in this paper in the context of the issues related to human resource management. It is logical to use the results of this study to formulate the third policy to be implemented in Etisalat. As the authors indicated in their research, workplace environmental quality is one of the crucial factors that determine the employees’ level of job satisfaction (Ahmad Alkuwaiti 118). Accordingly, when the workers of the company are satisfied with the conditions in which they are working, the quality of their performance increases. Therefore, it is suggested to implement structural changes in the architectural design of Etisalat workplaces in order to increase the levels of job satisfaction of the company’s workers.

Pitching the Proposed Approach to the Management of the Organization

The three policies that were formulated in the previous section should be pitched appropriately to the management of Etisalat in order to be implemented. In general, this report can serve as the basis for the development of the presentation of the projected changes. The overall context, which includes the strategic issues faced by Etisalat as well as internal and external factors, should be presented in order to for the management to understand the importance of the proposed approach (Al-Harthy 298). Then, the policies should be explained with references to scholarly literature and graphic support. Thus, a successful presentation will be built.

Conclusion

In conclusion, it could be stated that this paper provides a comprehensive analysis of Etisalat as the key company in the UAE telecommunication market. It is apparent that the company is holding a relatively sustainable position in the industry. However, it could be concluded from the gathered information that significant efforts should be implemented by the company in order to preserve its position and to further gain a competitive advantage when operating in domestic and foreign markets.

Evidently enough, the company possesses enough resources to implement programs that would help it to complete the company’s mission. The identified internal and external factors indicate that there is room for improvement in terms of Etisalat’s efficiency. Overall, it is suggested that the company will continue to have a considerable impact on the development of the telecom sector both in the UAE and in the international market.

Works Cited

Ahmad Alkuwaiti, Latefa Ali Saleh. Workplace Privacy: An Environmental-Behaviour Analysis of Etisalat Offices in Al-Ain. Thesis, United Arab Emirates University, 2009.

Al-Harithy, Mohammad Moeed. “Barriers of Knowledge Acquisition in Telecommunications Companies in Saudi Arabia: An Exploratory Study on Etihad Etisalat Mobily.” Communication, Management and Information Technology: International Conference on Communciation, Management and Information Technology, edited by Marcelo Sampaio de Alencar,CRC Press, 2016, pp. 295-299.

Ameen, Nisreen, and Robert Willis. An Investigation of the Challenges Facing the Mobile Telecommunications Industry in United Arab Emirates from the Young Consumers’ Perspective. 2016. Web.

Aremu, Olaitan. Consumer Purchasing Behaviour: Case Study of Etisalat Nig.Thesis, Seinäjoki University of Applied Sciences, 2013.

Kovacs, Judit Renata. Economic and Legal Analysis of the United Arab Emirates’ Telecommunications Market. Dissertation, Central European University, 2014.

Majumdar, Sudipa, and Behrooz Asgari. “Performance Analysis of Listed Companies in the UAE-Using DEA Malmquist Index Approach.” American Journal of Operations Research, vol. 7, no. 2, 2017, pp. 133-151.

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