Executive Summary
This study analyzes the competitive position of Etisalat Corporation by using the SWOT and PESTEL analysis to determine the marketing strengths and weaknesses of a company. These data allow determination of the most suitable development strategy according to the Ansoff Matrix. The research shows that Etisalat has a strong marketing position in the UAE as it has technical and financial advantages, as well as support from the state.
However, poor management of the company in foreign markets, which is displayed on the quality of services, is the most significant weakness of the company. In addition, Etisalat faces serious competition both on the domestic and foreign markets. For these reasons, the strategy of product development is most suitable for the company, since it helps improve the quality of service, gain the customer’s trust and get an advantage over competitors through technical innovation.
Marketing Analysis and Strategy Determination for Etisalat Corporation
Every company builds a strategy and plans for the next few years and for the long term to ensure its development and growth. However, quite often, management plans and ambitions do not coincide with the real factors and conditions in which their company operates. For this reason, corporations need analysis and strategic planning to discover their weaknesses, advantages, and risks, and then use the information to adjust their activities. The purpose of this paper is to assess the competitive position of the telecommunications company Etisalat by using PESTEL and SWOT analysis and select a strategy for its development according to the Ansoff Matrix.
History, Mission, and Current State of the Company
Etisalat Group is one of the largest telecommunications corporation based in the United Arab Emirates. Founded in 1976, today the company provides communications and Internet services in 16 countries of the Middle East, Asia, and Africa (“Etisalat Corporation,” n.d). The company’s activities have significantly influenced the dynamics of the market of these countries and have enabled millions of people to have access to the Internet and telephone communications. A current market cap of AED is $39.4 billion, and profit for 2019 completed to $2.4 billion (“#365 Etisalat,” 2019). Etisalat’s main goal and vision is “Driving the Digital Future to empower societies” (“Etisalat Corporation,” n.d). In other words, the corporation seeks to empower society with the everyday communication, business, and attractiveness of countries through technology.
The main goals of Etisalat are the improvement of technology and communication quality, as well as the geographical expansion of the network in Africa and Asia. For example, in 2018, the company became the first company that launched a commercial 5G wireless network in the UAE and then in other countries where it works (“Etisalat Corporation,” n.d). In addition, Forbes put Etisalat on 49th place in the “Top 100 Digital Companies 2019” and 384th position in “Global 2000 2019 “(“#365 Etisalat,” 2019). Thus, the company is one of the most successful telecommunications providers in the region.
Competitive Position of Etisalat
PESTEL Analysis
The environment in which the company operates is the basis for the occurrence of risks and benefits. Etisalat’s headquarter is in the United Arab Emirates, but the company works in other countries, so it has to deal with different business conditions. Nevertheless, PESTEL analysis demonstrates that the environment for business development is generally conducive to the successful implementation of the company’s goals and different strategies.
Politically, factors are based primarily on government loyalty to organizations, as well as political stability in the country itself. The political conditions in the UAE are suitable and favorable for Etisalat because the political structure of the government and the UAE culture ensures stability in the country. Besides, in 1983, the UAE government received 60% of the company’s shares, and 40% were sold publicly, which give the company full state’s support (“Etisalat Corporation,” n.d).
At the same time, political conditions in other countries pose risks, since Etisalat operates in states with different political regimes and open international conflicts, for example, in Afghanistan and Pakistan. However, the main activity of the company is concentrated in the UAE; therefore, even with political instability in one of the countries, most of the profit will remain safe.
Economic factors also contribute to the company’s activities because the UAE is a country exporting oil with a high level of GDP. Many users and business companies are willing to pay a higher price for innovative products and quality services. For this reason, the economic environment of the UAE is beneficial for the development of the company. Other countries that Etisalat covers have a different financial level; however, many of them experience economic growth. In addition, Saudi Arabia is one of the largest users of Etisalat services, and its economic level is quite high (“Etisalat Corporation,” n.d). Consequently, economic factors are advantageous to the work of the company.
Social factors are associated with globalization trends and the economic level of countries. Etisalat provides packages of services for different social and age groups to meet their needs. Hence, residents of any country, regardless of their age and financial capabilities, can choose a package that is suitable for them. The inhabitants of the UAE and Saudi Arabia also have a high level of financial opportunities, and therefore the company can create more expensive service packages that will meet the needs and capabilities of residents.
Technical factors are the main ones in Etisalat’s activities because quality and innovation are its main goals. The technological development of the UAE is high, since the government, along with local companies, care about the country’s development. In addition, Etisalat collaborates with many technology companies in other countries, and many of them are at a lower level of development. Consequently, the lack of technical progress in other countries allows Etisalat to introduce its technologies and innovations to expand its market.
Environmental conditions in the UAE, North Africa and the Middle East as a whole are quite similar and do not impede the company’s activities. Most of Etisalat’s services are made through networks and telecommunication towers, so land and transportation problems do not affect the company’s profits significantly. However, in the event of heavy rains, hurricanes or other weather conditions that will damage the technical devices and telecommunication routes, it takes a long time to restore them. Consequently, environmental factors are suitable for the company’s activities, but they should be considered for building strategies and business plans.
Legal factors are also beneficial for corporation both in the UAE and in other countries. In 1991, the UAE federal government issued Law No. 1, which gave Etisalat the right to provide wired and wireless communication services in the state, as well as with other countries (“Etisalat Corporation,” n.d). Neighboring countries, as well as states in which Etisalat operates, also have a similar legal system and laws that allow Etisalat to provide its services and pay average taxes. The only risk is the tightening of governmental control and censorship because of political changes in any of these countries, which can affect the quality of service to customers and the confidentiality of information. However, in general, current legal factors are beneficial to Etisalat.
Therefore, PESTEL analysis demonstrates that environmental factors in the UAE and other countries where Etisalat provides its services are quite profitable and convenient for the development of the company. There are also some political, economic, legal and environmental risks associated with the international activities of the company. However, a vast network of partnerships and favorable conditions for the home market allow Etisalat to minimize losses in case of changes in external factors in one or several countries.
SWOT Analysis
Etisalat, like any other company, has its advantages and disadvantages that can determine its further strategic development. Among the company’s main strengths are a strong market presence, investment in technology and a variety of services, while weaknesses include poor control over international ventures and a deterioration in the quality of services in other countries. The company also has such opportunities as geographical expansion and the introduction of technical innovations; however, it is threatened by competition from other large companies and changes in legal and economic factors.
Etisalat’s first strength is its strong market presence as it currently provides services to 16 countries on two continents and is a leader of telecommunication in the UAE. This fact contributes to both obtaining a well-known and reliable name that attracts customers, and financial stability, since the loss of profit in one country can be minimized by profit in others. This feature is also associated with a variety of services and products that meet the needs of all social and age groups. In addition, investing in technology and government support helps Etisalat offer unique products that competitors cannot propose.
At the same time, Etisalat’s weakness is a lack of quality management due to its wide geographical distribution. Etisalat often uses venture companies in other countries, which degrades the quality of communication between them. For this reason, employees of foreign departments can often be even unfamiliar with new features of the company or show a lower level of service than repel customers. For example, on one of the sites in Egypt, a client wrote a review: “This company is going down the road to trash I do not recommend it one bit to anyone in Egypt” (Magdy, 2020). Consequently, a lack of control impairs the company’s reputation and profit.
The main opportunities of Etisalat are the further distribution of the network in other countries, improvement of the technological component of services and increase of their range. The company’s financial capabilities, reputation, and experience enable Etisalat to partner with governments or telecommunications companies in the region. Besides, the technological backwardness of some neighbors, such as the lack of 5G, allows Etisalat to offer its services and expand its network of users. Etisalat also can change or supplement its services, both improving their quality and offering new packages and features.
The main threats of the corporation are other telecommunication companies both in the UAE and in other countries. For example, Du is one of the most popular service providers in the UAE, and although it is two times younger than Etisalat and has fewer customers, it already has an extensive network of users (“Who we are,” n.d.). It should also be noted that in Pakistan, Telenor, Jazz, Ufone, and Zong are much more popular than Etisalat and are officially licensed (“Cellular mobile,” 2019). In addition, any changes in the states’ policies and taxation of foreign companies are threatened by the loss of corporate profits and unprofitability of work.
Thus, although Etisalat has many advantages for working in the UAE, they need to reduce the shortcomings of control and management in international activities. The poor quality of service in the other countries allows competitors to be more successful than Etisalat, and push it out of the home market. Therefore, addressing management deficiencies in foreign countries is a priority for building a new strategy.
Conclusion of the Evaluation
Etisalat has a beneficial competitive position because the environment in which it operates and its advantages allow it to receive new customers and satisfy their needs. Etisalat is especially active in the domestic market in the UAE as it is a leader in its field, has state support and technological potential. However, in the international market, the corporation has weaknesses associated with poor management and quality control of services. Any negative political, economic, legal, or social changes in countries where Etisalat provides its services are threatened with a loss of profit. In addition, competition in the international market is quite high, and Etisalat must offer technologically new solutions along with a high-quality connection to remain profitable.
Determination of the Strategy According to the Ansoff Matrix
Defining future development strategies is necessary for any company that seeks to profit from its services. The Ansoff Matrix helps determine which of the product promotion options is the least risky and most profitable for the business. The four main strategies that the Matrix offers are market penetration, product development, market development, and diversification (Joyce & Richards, 2018). In the case of Etisalat, its strategy should be product development.
Product development is the most appropriate strategy for Etisalat according to Ansoff Matrix, since the company has its weakness in poor quality in other countries, as well as the risks of high competition and environmental changes. The development of a new product in current markets will help to develop technology and offer a unique product, as well as to eliminate their shortcomings in management simultaneously. These changes will allow the company to improve its reputation in the international market through innovation and quality.
However, if a company applies a market development or diversification strategy, then the corporation can fail the next stage of development and also lose the current markets. The implementation of these strategies requires considerable investments in market research, product development, and advertisement (Joyce & Richards, 2018). At the same time, successful telecommunication companies in the region have advantages in the quality and trust of users.
Thus, investment in new countries can further degrade the quality of Etisalat’s services in current markets, and competitors can easily defeat the corporation. However, if the company uses a product development strategy and gain the trust of their clients, then the next step can be the development of the market as the risks of losing customers are minimized.
Conclusion
An analysis of internal and external conditions demonstrates that the most profitable strategy for Etisalat is product development. This strategy helps attract new customers and gain an advantage over competitors, as well as eliminate the internal weaknesses of the company that compromises their reputation. Etisalat also has such benefits as technical innovation and state support in the UAE, which allows it to maintain and increase profits within the domestic market. Removing internal weaknesses will also strengthen Etisalat in foreign markets will enable it to compete with local companies, even if the external environment changes. However, this strategy is short-term and, if it is successfully implemented, the company will be able to expand the market.
References
#365 Etisalat. (2019). Web.
Cellular mobile. (2019). Web.
Etisalat Corporation. (n.d.). Web.
Joyce, P., & Richards, J. (2018). Exam success in business for Cambridge As & A level. Oxford, UK: Oxford University Press.
Magdy, O. (2020). Re: Their system is usually updating all… [Customer review]. Web.
Who we are. (n.d.). Web.