Organization and its Environment:
Etisalat is amongst the largest telecommunication companies operating primarily in the Middle East and Africa with its current headquarters in UAE. With a customer base of around 100 million subscribers in across 18 countries, it provides cellular and fixed line telephony, VOIP and data services to ISPs and organizations. It is the worlds 12th largest voice carrier for international telephony. One of the major investors in THURAYA the leading geostationary satellite network. It has been a receiver of continuance awards for superior services.
Today the internet subscribers for Etisalat are over 1.02 million. Major Internet services for home users of Etisalat are:
- Broadband services that provide internet access to home users.
- 3G based internet services for mobile users.
- Pre and Post paid internet usage i.e. the dialup services.
Etisalat provides a Wi-Fi system at some of the prime hotspot and central stations like restaurants, cafe and shopping malls. These are known as the iZone for internet service providers. iZones could be accessed in these areas by purchasing any of the pre paid cards at 4.5 USD /hours an existing account costs around 3 AED per hour for dialup and 6 AED per hour for broad band users.
ISDN and dial up internet access services are billed by account of usage i.e. per hour cost. DSL connections, residential and domestic cables have a fixed monthly rate that aims at providing high speed internet connection at nominal prices that depends on the bandwidth utilization plans. There are different business plans also that aims at the traffic utilization at high prices, plans change when it exceed the allocated bandwidth quota. (Etisalat)
They are governed by the internal elements of the organization primarily including ethical policies and leadership tactics of the people running the organization. Etisalat is devoted towards the fulfilment of above through:
Inculcating dynamism in its employees.
Welcoming employees to suggest ideas and make processes sociable and sustainable.
Etisalat training programmes and Etisalat academy have been established to promote employee excellence and draw more innovative ideas.
Internal audit of departments as per the rules and regulations of the company.
The work environment of Etisalat is one with great competition and its prime competitors include:
- France Telecom
- Saudi Telephone Company
The important areas of competition that impact the growth of Etisalat are as follows:
- Telecommunication Services
- Data Network operators
- Internet and online service providers
- Wireless network operations
- Fixed line voice services
Telecommunication Services: These services include mobile technology, network interfaces, etc. They denote the backbone for any system of organization. Any type of communication wired or wireless is controlled by the telecommunication department. This is one of the key areas of Etisalat for having a good market share.
Data Network Operators: These are the services that denote the successful and secured transmission of information from one place to another. The cost is mainly determined by the speed of connection (bandwidth) and / or the time till the connection is active (per hour cost).
Internet and Online Service Providers: These are the categories in which internet usage is the prime motto. Internet service providers could work at small level i.e. nation / town or city and also at international level which are also called as network service providers. These determine the net connectivity in their respective areas. Cost is mainly based on the bandwidth allocation and the number of bits or bytes transferred and not on the time of the connection.
Wireless Network Operations: Wireless services provided by many organizations like Etisalat come under this category. The services include 3G, GPS, etc. which were primarily started to benefit the common people and are now serving as a part of huge revenue income. The organizations like Etisalat earn a lot of profit from wireless communication of network because these are somewhat costly to that of the wired connection, but however preferred due to the mobility of the devices.
Fixed Line Voice services: These include the regular basic telephony service. Earlier, a decade ago these were the most popular areas of telecommunication which provided huge revenue. Now, it is a long gone time which has not much of competitors and users left. Users now a days prefer to have a mobile rather than having an old stylish basic and static phone.
The suppliers to Etisalat include Alcatel, Fujitsu (3G service equipments) and many others including Ericsson and Huawei.
- The employee strength of Etisalat is around 11,000 employees and uses online portals like Naukri.com for filling the vacancies with presence in over 18 countries.
- It is listed as a large cap stock on Abu Dhabi Securities Exchange in the Telecommunications sector.
- The company registered a growth rate of 22% in revenue and 19% increase in profits in 2008 against the fiscal of 2007.
- The total dividend offered by Etisalat in 2008 is 60%.
- In 2005 the company bought a 26% stake in Pakistan Telecommunications.
- The organization chart shows us how the organization Etisalat is maintained at its core. The main divisions are of Finance, Manufacturing and Human Resource. They all report to the CEO, the chief executing officer. One thing must be kept in mind is that the status for all these three are same meaning that no one is given extra benefits than other.
- Now we have many subdivisions under each category as described in the organizational chart. The terms are self-explanatory and need not to be discussed in details. (Etisalat Directory)
Organic v/s Mechanistic structures
- Implementation of new policies takes time to be welcomed and hence require strategic efforts for the same to overcome the resistances posed in the path. The contingency theory describes organic structure to be one that provides flexibility to the employees allowing them to initiate new processes and also adapt to the changing work environment.
- In context of Etisalat being a telecommunication company it is seriously involved in employing the latest technology to keep a hold over the markets as for example starting 3G services etc. To allow adaptability in such matters the company has training programmes specialised to keep the employees in touch with the current trends.
- Mechanistic structures on the other hand make the employees to work and behave in accordance with predetermined rules and regulations and other accountability. The employees have assigned duties to perform and are prohibited from performing additional duties unless asked as it may deteriorate the performance.
- Etisalat has billions of customers and so to handle the operations precisely the customer support team must properly handle the customer relations and the sales team must pay attention to increase the customer base.
- The organic structure is supported by Certification programmes, e-academy and mechanistic structure is based on the protocols such as ethical values. Etisalat has to continuously interact with the customers and so a union of both the structures help in proper coordination of business.
- Emotional quotient is the most important factor that keeps the employees glued to the protocols they need to follow to achieve their goals else if they compromise them neither their goals nor of the organization will be fulfilled. Sometimes both the mechanistic and organic structures may conflict with each other leading to a troublesome scenario whether to go by the protocols or to be flexible enough in such times by neglecting the standards set for them to follow.
Etisalat Emirate Telecommunication Company was started to provide world class communication services to the Emirates (UAE). Since then it has expanded into 18 countries and is soon to launch its services in India. To promote the services the company has entered into an Rs 35 crore contract with Indian superstar Aamir Khan thus sacrificing with its profits in the view to obtain benefits in the long run.
In 2009 Etisalat recorded revenue of 30.83 billion AED and was rated A+ by Fitch ratings. Etisalat achievement as the A+ ranked operator depends on the advanced technology and customer satisfaction delivered constantly in the process of its growth.
The company is on the path of expanding its business as well appears through having a strong policy for acquisitions and consolidations. The company is heading towards increasing profit margins and becoming the number one service provider in terms of customer strength and quality although the policies guarantee returns only in the long run and increased burden on the revenues in the short term approach. (organic vs mechanistic structure)
Some of the strategies outlined for expansions include:
- Current Chairperson of Etisalat H.E. Mohammed Hassan Omran while addressing the Abu Dhabi Media Summit delivered new business models targeting mobile banking and digital music services on mobile after the huge success in Egypt where Etisalat managed to penetrate 70% of the market in less than 3 years against the expectations of people that the market in Egypt was saturated.
- In another summit the senior Vice president of Etisalat Khalifa Al Shamsi projected the plans to become the number one broadband player in the Middle East after unveiling the fastest and cheapest broadband plans throughout the region. This has been able due to investments towards buying the latest technology for delivering services.
- Etisalat has brought sustainability into its agenda and hence is promoting electronic use to pay bills, read documents by giving incentives to its customers. This is propaganda to enable increase in customer strength and in turn draw more customers to its telecom network.
- Etisalat increased its proportion in Atlantic telecom to 100% thereby acquiring it completely bringing Central African Republic, Benin etc. Mergers are also being planned to enter Indian market- the second largest in the world and most competitive with huge promises to support long term investments.
- Etisalat completed its connectivity in the worlds tallest building Burj Dubai with the most advanced technologies and many more. This step describes its potential to deliver the best services in smallest time possible thereby saving huge input costs.
The short term plans of the company include:
The main aim of Etisalat is to use the short term plans to attract more customers and to keep them joined to its network during passive periods. The organization of summits, conferences in this respect are beneficial in delivering new business plans for major acquisitions.
- Expanding its business in UAE through campaigns like using mobile devices to read documents than using paper under the Pay and Win model.
- Organizing and sponsoring global summits to plan out new business models to increase the grip over the telecom market.
- Changing the prepaid and post paid plans according to the market and making prices extremely competitive such as Collect Call service. The second face of this aspect is to decrease the input costs and maximize average usage of minutes by the user.
- Introducing new broadband internet package on unlimited basis for 395 AED.
Short term training programmes to give the employees the advantage to adapt to changing technology as it is employed in a small span of time thereby utilizing their effort towards achieving the goals of the company.
The long term strategies of Etisalat include:
- Employment of 3G and 3.5G services in all its circles thereby reducing the input costs that were required to support the old technology platform.
- Acquisitions throughout the world to penetrate deeper into the market although the short term aspects would include lesser revenues but the long term ensures sustainability of its business. They include:
- Thuraya- the leading geostationary satellite network. By having a controlling stake the chances of suffering through precious bandwidth has decreased in the long run and deviance of latest technology is outdone.
- 16% stake in Excelcomindo (XL) Indonesia, the leading cellular operator in Indonesia and further to accelerate its business there.
- 82% majority in the Sudan operator Canar to completely control the operations and dominate the market.
- Acquiring stake in the largest cellular operator in Pakistan PTCL and diversifying its business as PTCL has a huge potential to control the economy of Pakistan.
- Expansion into the premium mobile services sector of Egypt.
- Becoming the 3rd largest operator in Afghanistan to control whole of the Middle East and reduce roaming costs.
- Entering the Indian market as Etisalat DB group in association with Dynamix Balwas Group into India in 15 circles to launch mobile and internet services in a population area of over 900 million people.
- Technology is what drives the margins of a telecom giant like Etisalat and therefore Etisalat has tapped the latest technology into its service areas and thus it has been able in become the leader in its domain.
- Etisalat is the largest 3G and 3.5G service provider in the Middle East and UAE and uses Thuraya one of the largest geostationary satellite systems in the world.
- Etisalat has completely replaced transmission lines by optical fibres and has through a study posted an 85% loss in carbon emissions and input energy cost by 73%. Thus it has revolutionised the Global Warming scenario and has given a new edge to the Kyoto Protocol.
- It uses the HSPA+ technology over its existing 3.5G network to provide broadband download speeds of 21 Mbps and upload speeds of over 11 Mbps.
- Worlds tallest building Burj Dubai is now connected through Etisalat cutting edge network with the use of wireless standards like Wimax and LTE and Etisalats mobile and fixed line services anywhere within the iconic tower.
- Etisalat supports the services of Blackberry provided by Research in Motion (RIM) to its business class through its advanced network.
- Etisalat provides HSPA WI-Fi modem services to not connect to broadband internet but also to simultaneously connect to 5 Wi-Fi clients at the same time.
- Etisalat now provides services to iPhone users through strategic alliance with Apple.
- Etisalat provides broadband connectivity using commuters within the Dubai Metro to be fully utilised once Dubai Metro project comes to reality completely.
- E-vision the largest DTH service is run b Etisalat as a part of its expansion policies in UAE.
- Strategic alliances with Alcatel, Ericsson and Huawei to support its expansion plans in India and other nations for rollout of services and mobile handsets.
Thus it is evident that Etisalat uses the current trends in technology with a sustainable background to deliver its services at the most efficient way to its customers. It is in lookout for new platforms to be utilised if the infrastructure demands it like the case of connecting Burj Dubai through the most advanced wireless techniques. (emirates telecommunication)
The organizational culture in an organization like Etisalat can play an important role in turning it into one of the great success stories in the world. The environment is crucial to the performance of every activity of the organization.
According the Hofstedes theory of cultures Etisalat agrees to the five dimensions stated as follows:
- Power Distance:
- Uncertainty Avoidance:
- Individualism and Collectivism:
- Masculinity and Femininity:
- Long and short term orientation:
Etisalat has minimized power distance between the various levels of organization in its endeavour to incorporate new ideas that are suggested by its employees towards the benefit of the organization. This is evident through public gatherings that are constantly organized for its employees to keep them feel good and work better towards their organization.
Etisalat always employees only those trends that re within the reach of everyone and have been proved to be useful and tries to outdo with the illusions towards a newer idea or service by proper delivery of services not only to its employees but also to its customers.
Etisalat has good balance between individualism and collectivism as the people within the organization have to suffice with the goals that are given to them which have a balanced role in individual and team effort. Individualism and collectivism can separately also benefit an organization but a blend of both lends stability to the system.
Middle East has slightly higher restrictions on women than men owing to their culture and traditions thus in this case we can say that masculinity is given higher importance and thus the majority staff is composed of men. However in the recent years this trend has gone down and women have also bagged up opportunities that were enjoyed by men.
Eastern nations score relatively high here as they are more perseverance and thrift oriented (long term) whereas Western nation score relatively low having higher inclination towards short term orientation.
Other theories have their own criteria rather we focus on the Entrepreneurial theory which is much suited to this domain:
- Employees at Etisalat are more focussed towards empowerment.
- Innovation is supported through continuous training programmes.
- Management essentials are emphasized.
- Freedom to fail and grow.
- Following of business ethics.
- Thinking of near future with the present.
Besides the above corporate citizenship and freedom to follow his or her religion are some other cultural parameters allowed at Etisalat.
Edgar Schein had said the leader must be conscious of the cultures within the organization else he would get managed by them. Culture is too deeply rooted within the organization and to work it out requires time and great effort. Often outside analysts can study and state the measures well and so one option for Etisalat as it operates in many diverse cultural regions is to pay emphasis on local cultures and get system analysed using analysts.
Thus we can conclude that Etisalat is an organization where there is a strong emphasis on cultural values and as a whole it has a strong competitive edge to compete in any market and has the flexibility to diversify its policies to penetrate into the market. Etisalat with its current framework can easily strive to become the leading telecommunications operator in the world.
The analysis of the internal and external business environments of Etisalat is supportive to its growth in the near future. Thus Etisalat should pay attention towards identifying new markets with high average revenue per user so that its expansion policies dont drain out its wealth and impact the health of its shares. Spectrum biddings must be taken into importance as with lapse of time the availability of spectrum would become scarce thereby putting an end to the expansion of Etisalat and thus it is recommended that the short term policies should include spectrum tapping to tap profits in the long run
- Welcome to Etisalat (n.d.), Retrieved on March 15, 2010 from http://etisalat.ae/ (Etisalat)
- Etisalat Directory (n.d.), Retrieved on March 15, 2010 from http://www.avaya.com/gcm/master-usa/en-us/corporate/pressroom/pressreleases/2005/pr-050524a.htm (Etisalat Directory)
- Emirates Telecommunication(n.d.), Retrieved on March 15, 2010 from http://www.hoovers.com/company/Emirates_Telecommunications_Corporation/rfjfrji-1.html (emirates telecommunication)
- Organic structure vs mechanistic structure (n.d.), Retrieved on March 15, 2010 from http://www.associatedcontent.com/article/505097/organic_structure_vs_mechanistic_structure.html (organic vs mechanistic structure)