Global Business Strategy - Emirates Telecommunication Corporation - Case Study Example

Global Business Strategy Introduction Emirates Telecommunication Corporation Emirates Telecommunication Corporation is a United Arab Emirates based telecommunication service provider and presently operates in over fifteen countries in three main areas, the Middle East, Asia and Africa. Etisalat is ranked as the World’s number twelve largest mobile operator. It has customer base of over 150 million subscribers. The Emirates Telecommunication Corporation, famously known as Etisalat was named by Forbes in 2012 as the most powerful Company in the United Arab Emirates. Some of the major trends that the telecommunication industry faces are Growth in the ICT Market, Competition and Regulatory challenges. Growth in the ICT Market The ICT industry has been identified as one of the most dynamic and vibrant industry in the global market. As the number of people who get connected increases, the more application and services are being developed so as to improve the customer experience. The mode in which the consumers access such services has change over time and consumers are shifting form the traditional media to Internet broadband services. The current number of internet users has significantly increased globally. The number has increased from 1.8 billion in 2007 to over 2.7 billion by the end of 2013. Etisalat being one of the major multinational telecommunication companies, it is challenged to meet the growing need of the growing number of telecommunication consumers. The company has done this investing a significant amount of their capital on modern infrastructure so as to also be able to much its major competitors in the industry. The graph below shows the Increasing trend in the telecommunication industry. Competition Ever since its establishment, Etisalat has been enjoying monopoly in the United Arab Emirates. This provided it an opportunity to grow significantly and this is one of the main contributing factors to growth. However, this scenario has changed since the government signed into law a bill that promoted competition in the telecommunication industry of the United Arab Emirates. This saw the entrance of other mobile and telecommunication service providers such as “du” among other competitors. Competition has had an impact on the performance on the performance of Etisalat since it has opened room to other international telecommunication providers such as Vodafone. The company has embraced the competition positively and aims at diversifying its products, improving efficiency and reducing its operations cost so as to counter the competitions from the new market entrants. Regulatory challenges With increased players in the market, there has been need for introduction of a regulatory body into the industry which uses appropriate regulatory tools that respond to the new market behaviours and the ever growing needs of the customers. However, competition has increasingly been complex for the regulators in the converged United Arab Emirates environment. The regulator are faced with the issue of how to improve internet access, reduce costs, increase the transactional connections and management of traffic in an effective and fair way which balance the consumer needs and the service provider. This is the latest trend that Etisalat has had to deal with and ensure that they meet the regulatory needs of operating in the industry. The increases of various players require that each and every player in the market is highly supervised to prevent any unethical practices that the some of the players might try to engage in. It is therefore important that the regulatory commission be strict on the policies that have been stipulated. Etihad Airways Etihad Airways is a major carrier in the Middle East which was established in 2003 by a royal decree and is based in Abu Dhabi. The airline began its operations in November the same year. The airlines derives its name from the “Arabic term union.” With over 1000 thousand flights per week and passenger destinations in Asia, Middle East, Europe, Africa, Australia and Australia, Etihad is the fastest growing multinational in Middle East. The airline carried over 10 million passengers in 2012 and had revenues of over 4 billion dollars. Success Factors It’s People In order to improve the performance and processes of an organization, the people and the performance division should always support and also be supported by the organization. Etihad’s exceptional way of recruiting and training its staff has enabled it provide better flight and inflight customer service and this has made it attain award winning cabin crew title over the years. The airline also provides its cabin crew members and the pilots an opportunity to see the world by visiting their destination and therefore creating satisfaction among the staff members. To ensure that they continue to provide the best service constantly, Etihad Airways has established Aviation Academies in its various destination areas so as to develop the skills of its staff. Product and services The major propelling factors for Etihad Airways would are the types of products and service that a company offers. The major Key Success factors in Etihad’s products and services have been ground product offerings, aircraft developments and the in-flight developments. Etihad airways has made significant steps in the recent years in aircraft and inflight developments so as to be able to penetrate the eastern market and be able to serve their customers better. The Airways’ premium flight philosophy has been expanded to all the economy class on all its routes and flights. On the other hand, the longer flight destinations include multiple course meals and other hot deserts. For example in 2010 the Etihad Airways incorporated an inflight Japanese traditional dinning concept. The main reason as to why Etihad has innovated its products is to offer something different from what its competitors offer, through this most passengers will be attracted to Etihad and hence the airline will benefit greatly. Factors that Facilitate Competitive Advantage Route Systems The other factor that has significantly contributed to the growth and success of Etihad Airways is the route system. Etihad introduced new and also increased the routes in its flight schedule system, a factor that has enabled them have a competitive advantage in the airline market especially destinations of the far eastern regions. Etihad has several flights to areas such as Seoul, Beijing and Bangkok and this has made their route system unique compared to other Airlines in the market. Etihad realized a market gap in the airline destination and really maximized on it. Etihad benefited from the large customer base that prefer to travel to the eastern regions directly. Revenue and Cost Control To grow effectively Etihad made solid steps to improve its revenue and cost controls. This step was mainly achieved by the support of its finance department by informing and advising the airline on matters that pertaining financial and risk management, investment and other services that relate to the airline industry. Regulating operations cost is always a major issue in any industry. By Etihad being able to reduce its operation costs this means the consumers will also be able to benefit from lower cost and this has the long run effect of attracting more customers to the airline. Diverse Workforce Etihad Airways being An Airline from the United Arab Emirates and the greater Arabian region, it ensures that it provides a prestigious Arabian heritage and culture by providing top notch hospitality to its passengers, compared to its competitors. The workforce is also endowed with a diverse workforce from all the destination countries, so as to meet the needs of different people and culture. This has been done because most of the passengers that travel abroad are multilingual and the airline aims at meting the need of the various groups. Innovation This has been a major source of competitive advantage for Etihad Airways and hence enabled it to gain dominance in the market, not only in Middle East but globally. The airline has been constantly innovative and this has enabled the airline provide superior travel experience both on the ground and inflight. The well trained staff ensure that the services is provided in Excellence. The other advantage is that the airline provides the superior travel experiences at very reasonable prices. Entry modes in Foreign Markets The entry modes in the foreign markets, is summarised in two concepts, this is mainly the establishments modes and the operations modes. Operations Mode The operation mode is term used to refer to a business’ or a corporation’s institutional arrangement at any given time. This can be either at the point of entry or afterwards. As the situations changes, companies can adapt their strategies and structure to suit the new changes and realities. A good example is a shift from a licensing arrangement to a wholly owned subsidiary or a joint venture. In such a circumstance the corporation is referred to be operating in a mode that is different from the initially mode in which it entered the market. Joint ventures in the Middle East, work just the same way as they work in all over the world. It is important to note that the joint ventures work best when there is true and clear partnership that involves the capabilities of various firms. There are also some important factors that need to be taken to consideration. The first one is that in most countries, the foreign company/partners to the joint venture, in most times are not allowed to have majority of shares in those specific joint, especially if the ventures is situated in areas outside the Free zones. The other major issue is that the local companies in the Middle East are likely to have arrangements and agreements with the joint ventures. This is very common especially in the retail business. Licensing and franchising are also well developed in the middle east and characterized with numerous consultancy services and both the regional and national franchising fairs that take place every single year in the Middle East. However most of the franchise of the major fast food chains have already been taken up by most business and organization. The Middle East market is also characterized as dynamic and that new opportunities are likely to be on an ongoing basis. Establishment Mode Establishment in this scenario refers to manner in which the entry mode choice is achieved. This can be through an acquisition or Greenfield operation. Green field operation refers to a situation where a company establishes its own operation or can achieve this through acquisition where the foreign company takes over whole or part of an existing operation. Choices relating to entry, establishment modes and the progressive management of a company are very important management responsibilities since they have the potential to detract or contribute significantly to the company’s profits. If proper management are made initially then no much supervision that is required. Fashion Brand If I were to establish fashion brand, the main country that I would head choose to expand my business would be the United Arab Emirates and specifically Dubai considering the fact that they have policies that encourage foreign investments. Dubai has free zones that were established with the main purpose of facilitating the foreign investments and hence were given the legal status by the United Arab Emirates. If I establish my firm within the free zones, I will be able to own my fashion brand alone without any local interference hence assuming 100 percent ownership The Entry mode that I would prefer is the establishment mode, this is because this specific mode gives the foreign companies an opportunity to fully own and run their business without interference. The entry mode has the Greenfield investment opportunity where the company establishes its own operations. Read More