Company Analysis................................................................................................................... 3
a. Defining the business................................................................................................... 3
i. Who are the customers?................................................................................................ 3
ii. What needs are being satisfied by the company’s goods or services?........................ 3
iii. What are the company’s core competencies?............................................................. 4
b. Identifying the company’s competitive advantages.................................................... 5
i. What are the company’s competitive advantages built upon?...................................... 5
c. Size and locations currently operating......................................................................... 6
d. Competitive strengths and weaknesses...................................................................... 6
e. Need for global expansion at this time......................................................................... 8
Industry Analysis...................................................................................................................... 9
a. Analysis of Pakistan Industry.........................................................................................
i. Globalization drivers for the industry................................................................................
Target Country Environment Analysis................................................................................... 11
a. Demographic characteristics..................................................................................... 11
b. Target location description......................................................................................... 12
c. Cultural characteristics.............................................................................................. 13
d. Workforce characteristics.......................................................................................... 13
e. Relevant trade and investment policies and laws...................................................... 15
f. Politics and laws that may affect entry...................................................................... 15
g. Market transition and financial market issues........................................................... 15
Target market analysis.......................................................................................................... 16
a. Description of customers and characteristics........................................................... 16
b. Estimation of market size.......................................................................................... 17
c. Local competition analysis......................................................................................... 18
d. Estimated market share and sales expected............................................................ 20
Strategic alternatives............................................................................................................. 25
a. Market entry Alternatives...............................................................................................
b. Marketing Alternatives...................................................................................................
c. Human Resource Alternatives.......................................................................................
Implementation of strategic plan............................................................................................ 28
Appendices............................................................................................................................ 30
Bibliography........................................................................................................................... 31
I. Executive summery
This report was commissioned to examine the
international strategic plan of Emirates Telecommunication Corporation,
Etisalat, for entering the Pakistani telecom market.
The
research draws attention on the fact that after about thirty years of efficient
monopoly of the sole telecommunication service provider in the local market,
Etisalat decides to go internationally mainly because of saturation in the
local market and fear of upcoming competition- which does not exist until this
moment. The international expansion of Etisalat had started shortly before its
monopoly came to an end in mid-2004. Currently, it is operating in Saudi Arabia
and Sudan.
Etisalat
provides more than 4.0 million subscribers of the UAE total population of about
4.0 million with state-of-the-art technology through all its services, which
basically consist of fixed-line, mobile-line, internet and cable and satellite
services.
To evaluate Etisalat’s performance and
business strategies, a SWOT analysis was conducted here. It indicates that
Etisalat possesses a healthy position and a substantial strength to balance its
weaknesses and expand further.
The report also discusses the general
globalisation drivers for the telecom industry.
A thorough analysis of the target country,
Pakistan, environment shows growing macro and microeconomic indicators; a very
big telecom market potential with total teledensity at only 10.2 percent of the
total population (152.53 million); a
very strategic geographic location for further
regional expansion for Etisalat; well trained and cost effective human
resources; comprehensive trade and investment policies. Pakistani telecom
market had been dominated by the monopoly of the state-owned Pakistan
Telecommunication Company Ltd. (PTCL) until it was de-regulated in 2003-04 and
opened up for Foreign Direct Investment (FDI) which is expected to reach $ 5-8
billion in five years. PTCL is currently1
owned up to 88 percent by the government, and is offering 26 percent equity
stake to foreign investors.
To further analyse the Pakistani telecom
market, Porter’s Five Forces Analysis was conducted. It indicates a high growth
potential assisted by high domestic demand and increasing competition which
first started less than two years ago. Although, Pakistan’s international
political situation is showing impressive improvement, the internal violence is
still threatening the economy.
After studying all the different aspects
associated with international strategic planning, it is recommended that:
·
Etisalat enter the telecom market through Equity
Alliance with PTCL since PTCL is offering 26% stake of its shares to foreign
investors,
·
Etisalat‘s management, operation and control are structured by region
depending on the large size and provincial structure of the Pakistan territories.
·
The company goes for the Niche market and place itself as one of the
best in the Industry.
·
Etisalat try to be the market leader in Pakistan market considering the
huge capital investment and Long-term objectives.
·
Etisalat invest heavily on the infrastructure, human resources and
marketing
·
Etisalat increase demand but decrease costs and offer competitive prices
·
Etisalat adapt a multi-domestic strategy due to the multitude of culture
of Pakistan
II. Company Analysis
In 1976, five years after the Trucial States became
the United Arab Emirates - a Federation of seven emirates - Emirates
Telecommunication Corporation came into being.
Emirates Telecommunication Corporation- Etisalat has
been the official telecommunication service provider of the United Arab
Emirates (UAE) for about 30 years. It had been a monopoly until med-2004, when
the government decided to open the market up for local and foreign competition.
At that time, Etisalat was already tapping the international market for
expansion.
The Corporation has succeeded in transforming the UAE
into one of the most advanced countries in the world, in the field of
telecommunications by providing advanced, efficient and reliable services.
At the end of 2003, Etisala’s paid up capital stood at
AED 4,000 million, market capital at 48,676 million and total revenues about
9,226 million.
Etisalat
currently has 9,400 employees distributed in about 56 branches all over the
UAE, according to Etisalat Company Profile at Zawya.com Company Profile,
available: (http://www.zawya.com/cm/profile.cfm?companyid=334652&ric=ETEL.AD), accessed, June 2005.
a. Defining the business
i. Who are the customers?
Etisalat is targeting Business users,
Corporate & home users in the telecommunication and IT sectors.
ii. What needs are being satisfied by the company’s goods or services?
As Etisalat provide Telecommunications Services to UAE
and other regions, it fulfils the telecommunication needs of the local market,
by providing services in below sectors:
·
Cable & Satellite Services
o
Cable TV System Operators
o
Direct Broadcast Services Providers
o
Satellite System Operators
o
Data Network Operators
o
Internet & Online Services Providers
iii. What are the company’s core competencies?
The Etisalat had a monopoly on the UAE market until a federal decree was passed allowing for competition and is 60% owned by the UAE government and 40% by the UAE nationals. As per the "Zawya" company profile, the company had 1.16 million fixed-line subscribers and 3.31 million mobile users at the end of June 2004 compared to 33,000 fixed telephone lines and 1,600 telex lines back in 1976. This is in relation to about 4.0 million total population of the UAE (Economist Intelligence Unit, 2004, p. 3) UAE Country Profile)
Etisalat network of Satellite, Earth and Coastal
stations; landlines covering the length and breadth of the UAE; submarine cable
systems, cable ships, optic fibre cables and international projects are all
utilized to service the communication needs of its local and international
customers.
The group had a monopoly on the UAE market until a
federal decree was passed allowing for competition and is 60% owned by the UAE
government and 40% by the UAE nationals.
Etisalat had by far invested towards the best
telecommunication infrastructure in the region.
Cooperate are widely geographically speeded in the
region, which allow a good access to its services and customers broadcasting.
b. Identifying the company’s competitive advantages
i. What are the company’s competitive advantages built upon?
Businesses use a wide range of state-of-the art
services offered by Etisalat divided into nine businesses divisions (eCompany,
Ebtikar, Emirates Data Clearing House, Emirates Internet Exchange, Etisalat
Academy, Etisalat college of Engineering, The Contact Centre, UAE LAB, and UAE
Network Information Centre).
As Etisalat was the only service provider for the
following services: Telephone, Mobile, Paging, Internet, eCommerce, Ebtikar,
Data Services. However there is no competitive advantage with other
competitors of producing such services.
However, Etisalat kept the high level of standards and
quality provided to customers domestically and promising to give it
internationally.
Besides a comprehensive range of readily available
standard telephones and feature phones, Etisalat offers businesses
sophisticated key phone and PABX systems incorporating the very best in
telecommunications technology to meet their communication needs. They also
offer several other products and services:
Etisalat’s
Calling (ECC) and Prepaid Cards (PPC) enable customers not only to
call from the UAE to a host of countries worldwide but also make calls from
these countries to the UAE while travelling. ECC Cardholders can make their
calls and have the call charges billed to their designated business, mobile or
home phone while PPC cards, available in a variety of denominations, enable users
to budget their telephone expenditure and offer ease of use and call mobility.
The GSM Service
incorporates advanced digital communication technology with full roaming
facilities in countries where there exists a reciprocal arrangement. The unique
feature of the GSM cellular service is the subscriber’s identity module (SIM)
card which is used to activate GSM handsets and provides unprecedented levels
of security and privacy combined with high quality transmission. A prepaid GSM
SIM card called ‘Speak Easy’
is also offered.
The advanced Voice Mail Service - Al Zajel - is ideal
when a similar message is to be sent to a group of people. The facility takes
all the subscriber’s messages, whether he has a standard or a mobile telephone,
and forwards these automatically to any phone number he chooses. Access to
voice mail is controlled by a personal identification number.
A range of advanced Star Services
provide added convenience to our customers - Call Waiting, Do Not Disturb, Call
Barring, Hot Line Dial, Call Forwarding, Conference Calls, Incoming Call Transfer,
Call Transfer on No Reply, Call Transfer on Busy are a few of these services.
Many Etisalat departments and subsidiaries had
certified against the ISO 9001. The certification represents the leadership
values and focus toward Quality of product and service that Etisalat is
dedicated toward.
“The Etisalat division - Emirates Internet and
Multimedia was recognized as the best regional Internet service provider (ISP)
at the Middle East Information Technology Awards 2001 held on January 19, 2002.”(www.emiratees.net.ae/isp/awards.html)
Etisalat always come up with new ideas and strategies.
According to Senior Manager, eCompany, “ With the help
of Business one promotions innovative offer, SME ‘s in the UAE can now truly
benefit from the same high-speed access to the Internet previously available
only to large companies. They will be able to do more in less time by engaging
in a wide range of online activities and make better use of the opportunities
provided by the Internet. Business One will offer these businesses the
opportunity to incorporate the Internet into their day-to-day business
processes and gain competitive advantage and increased productivity.”
c. Size and locations currently operating
The former telecom monopoly offers
traditional fixed-line services (1.16 million customers), GSM-based wireless
network service (3.31 million subscribers), Internet service (more than 400,000
users), and data communication. Etisalat's E-vision unit provides digital cable
TV, and its E-marine division installs and maintains submarine cable in the
Persian Gulf region. Founded in 1976, Etisalat also operates call centers and provides research and education in the telecom
field.
Locally, Etisalat has about 56 business and
service centres distributed all aver the seven Emirates, and employing 9.400
worker.
Whereas externally, Etisalat succeeded last
year in gaining the second GSM license in the Saudi Kingdom, Etihad-Etisalat
Co., which was followed first by the license to operate Sudan’s second
nation-wide, fixed-line phone service, Sudan Telecommunications Co., and second
by that of Zanzibar Telecom of Tanzania.
These major steps are just the beginning
stage of Etisalat’s ambitious plan to expand into regional and international
markets and boost the value of shareholders investments,
according to Etisalat Company Profile at Zawya.com Company Profile, available
at: (http://www.zawya.com/cm/profile.cfm?companyid=334652&ric=ETEL.AD),
accessed, June 2005
d. Competitive strengths and weaknesses
The following are the
Strengths, weaknesses, opportunities and threats analyses (SWOT) pertaining to
the Etisalat’s overall performance, business formulations and strategies.
Etisalat’s
Telecommunications maintain a healthy position. Etisalat has substantial strengths to balance out
weaknesses. Market opportunities in internet and services are fast growing.
Competitive threats are becoming more of an issue as key competitor’s ramp up
for new opportunities and other new competitors are entering the industry.
Strengths:
Following is a Strengths, Weaknesses, Opportunities and Threaths Analysis (SWOT) conducted to evaluate the status of Etisalat in the telecom industry in the UAE:
1- A sole service provider that controls all aspects of telecommunication services. This would limit foreign and local investment in telecommunications and Internet gateways;
Following is a Strengths, Weaknesses, Opportunities and Threaths Analysis (SWOT) conducted to evaluate the status of Etisalat in the telecom industry in the UAE:
1- A sole service provider that controls all aspects of telecommunication services. This would limit foreign and local investment in telecommunications and Internet gateways;
2- Small population and country - making investments in the latest Telecommunications infrastructure and technologies are possible and cost effective;
3- Overwhelming government support on their heavy investment on telecommunications industry and infrastructure. Policies aimed at inviting foreign technology firms into free trade zones such as Dubai Internet City and Jebel Ali Free Trade Zone will allow the UAE to continue its diversification efforts;
4 - Etisalat generally doesn't provide
training to customers which could cause more expenses. However as systems
become more complicated, especially with LAN and Internet practice the company
had managed to formulate to have their systems equipped with friendly
environment that could train the users while utilizing the said services,
5 - Ability of the company to attract, train, and retain qualified technical, sales, marketing, financial, and management personnel to meet the challenges of growth.
6 – A product road map which leads to the development of new functionalities and the enhancement of existing system modules which are in-line with customer expectations.
Weaknesses:
As many other telecommunication
companies-Etisalat has currently experiencing the following weaknesses:
1- The cost of Internet access for end users is soaring high. Although many of the people in the modernized administrative emirates (Abu Dhabi, Sharjah, and Dubai) are able to afford modern technologies, other regions are left behind. Until the gap between these emirates and the remaining four (Ras Al-Khaimah, Ajman, Al Fujayrah, and Umm al Qaywayn) is sealed the UAE will never be a fully modernized country.
Opportunities for Etisalat to go internationally:
1-
The sound reputation of Etisalat’s efficiency in its services and technology not only regionally but also internationally
2-
The generous financial support that banks and
financial institutions are ready to provide Etisalat with for its regional as well as international expansion strategy
Threats:
Based on collective opinions we suggest
that Etisalat in general are prone to harmful business treats.
1- Up Coming competition in the market of
telecommunications, and customer care systems are highly competitive and the
company expects this competition to increase. Not only does the company compete
with other independent Service providers, it competes with system integrators
and with internal billing departments of many telecommunications carriers.
2 - It is expected that continued growth
and competition in the telecommunications industry, and the entrance of new
competitors into the market is expected.
3 - An integral factor in the
company's growth strategy is the development of third party relationships with
a number of consulting and systems integrator firms to enhance its marketing,
sales, and customer support efforts. The benefits are in respect to
installation and support of its product and lead generation and assistance in
the joint marketing and sales efforts in order to generate new business
opportunities. Failure to generate these relationships will have a negative
impact on the company's ability to meet its targeted growth in sales.
4 - Market is total excoriated
as the population is limited in the region comparing to the infrastructure
invested.
e. Need for global expansion at this time
Telecommunications is now an
integral part of the social, economic and political tissue of the world.
Major advances in
communications technology have substantially widened the range of services
carried by the network. Satellites, microwave radio, optical cable links, digital
switching and transmission, offer a potential for the improvement of quality
and for the extension of access to the most remote areas. The world is now a
fully integrated information network.
The pace of technological
change is increasing. The magnitude domestically and globally of demands the
future will make on our creativity and capacity to adapt is great. Customers
will demand more than just state-of-the-art technology. They will want
convenience and increased control over their lives that easy and affordable
information access can provide. Businesses will look for total
telecommunications solutions that will not only enable them to remain
productive and compete globally but will also give them a competitive edge and
a return on their investment.
Etisalat is well-placed to meet
these challenges head on. “We will continue to be there - contributing - in
guiding, assisting and developing cost-effective technologically advanced
services that will meet the varied needs of our local and international customers
and pave the way for the region's new dynamism in the telecommunications
industry well into the 21st Century.”(Public relation press, Etisalat, 2004,
p2)
New services are constantly
being introduced with existing ones regularly being upgraded - these are all
designed with the aim of helping customers to streamline and improve their
communication needs, stay productive and compete globally.
The Loss of local market with
upcoming competition is being compensated by expanding in the internal markets.
III. Industry Analysis
Since the telecommunication industry in the UAE was
dominated by the monopoly of Etisalat until a presidential decree was announced
in med-2004 –as mentioned before- to end it, there has been no competition in
this sector. Therefore, the telecommunication industry as well as its
globalization drivers will be discussed in general.
Communications and data service networks were built on
proprietary platforms to ensure availability, reliability, performance, and
service response time. This required highly purposed hardware, operating
system, middleware, proprietary technologies and interfaces. Presently the Industry must move away from
specialized proprietary technologies etc and towards commercial-off-the-shelf
approaches to ensure the following:
- Faster time to market.
- Reduce design and operation costs by using commercial-off-the-shelf hardware and software components.
- Communication platforms need to maintain carrier grade characteristics in terms of availability, reliability, security, and faster service response time.
- Service providers and carriers need to be able to deliver new services based on common standardized platforms.
The telecom industry is moving away from specialized
proprietary systems toward open platforms that are based on
industry-established standards and common practices (http://www.linuxplanet.com/linuxplanet/reports/5906/1/).
i. Globalization drivers for the industry
Common
Customer Needs - The need and tastes of the telecom
industry are more or less similar from one country to another thou they may be
some different preferences as per the local taste but the core service will
remain same. Accordingly Telecom Industry will offer more potential for
globalization.
Global
Customers - Global management of telecommunications
is provided by the "Concert" service offered by British Telecom and
its American partner MCI, allowing a multinational company to outsource all
responsibility for management of its purchase and use of
telecommunications." (Lovelock, Christopher, Goerge, 1996)
Global
Channels - The World Wide Web now offers global
outreach to even the smallest of companies. The Web can help sell any type of
core product through information-based supplementary services and can actually
deliver many information-based services directly to customers.
Global
Economies of Scale - Global scale economies apply when
single-country markets are not large enough to allow competitors to achieve
optimum scale. Scale can then be increased through participation in multiple
markets, combined with product standardization and/or concentration of selected
value activities.
Favorable
Logistics - Logistics is seldom a barrier to
globalization for information-based services. Using electronic channels to
deliver such services allows providers to concentrate production in locations
that have specific expertise and to offer cost savings or other meaningful
advantages.
Information
Technology - For information-based services, the
growing availability of broadband telecommunication channels, capable of moving
vast amounts of data at great speed, is playing a major role in opening up new
markets. Access to the Internet or World Wide Web is accelerating around the
world. But there may be no need to duplicate all informational elements in each
new location. Significant economies may be gained by centralizing
"information hubs" on a global basis.
The use of information technology may allow companies
to benefit from favorable labor costs or exchange rates by consolidating back
office functions (such as accounting) in just one or a few countries.
Government
Policies and Regulations - Host governments
affect globalization potential through local content requirements, currency and
capital flow restrictions, technical and other standards, ownership
restrictions and requirements on technology transfer.
Nations may perceive both an economic and a cultural
threat in unrestricted imports of information-based services through electronic
channels. Government regulations range from controls on private ownership of
satellite dishes
For information-based services, special policies on
education, censorship, public ownership of communications, and infrastructure
quality may apply; technical standards may vary; and government policies may
affect pricing.
Transferable
Competitive Advantage - The single most important competitive
globalization driver arises from transferability of competitive advantage. If
one industry participant can leverage its competitive position in one country
to build an advantage in other countries, all its competitors need to develop a
global strategy too.
Services and
Global Market Participation - A global strategy
approach to market participation involves building significant share in
globally strategic markets. Such countries are important beyond their
stand-alone attractiveness and may be a source of volume to meet economies of
scale, the home or significant market of global customers or global
competitors, or a major source of industry innovation (Lovelock,
Christopher H. Yip, George S., 1996).
Target Country Environment Analysis of
The
Islamic Republic of Pakistan
The Islamic Republic of Pakistan is a very
huge market by any standard. Its economy is one of the fast growing economies
in south Asia. According to the latest Yearly Economic Survey 04-05 of
Pakistan, the Gross Domestic Product (GDP) registered the highest growth rate
in two decades. It increased from 6.4 percent in fiscal year 2003-04 to 8.4
percent in 2004-05 that boosted Pakistan’s economy to rank second after China.
Additionally, this fiscal year has also witnessed the highest per capita income
at $ 736 in dollar term. It has been performing very well over the last three
years with an average growth of 13.5 percent yearly.
a. Demographic characteristics
Pakistan
has one of the largest populations world-wide. It constitutes of 152.53 million
which is the seventh largest one in the world. It has been growing by 2.0
percent since 2000-2001. Although, the per capita income has been rising over
the last three years, many Pakistanis still live with very limited income or
even under poverty line struggling with the rising living costs despite
governmental effort to curb the rocketing inflation rates which registered its
highest in eight years at 9.3% (Economic Survey, 2004-05, chap.13, p.141)
Viewed from another perspective, this very
high population figure shows a large potential for the telecom sector, taking
alone that 56.6 percent of total population is aged between 15 to 64 years
which represents student and working-age that depend heavily on communication
methods on their daily-bases transactions. In addition, 39.6 percent is aged
from zero to 14 percent which represent the future generation of the population
whose demand for the fast growing technology of telecommunication will be much
more apparent (CIA-The World Factbook).
Although the latest teledensity stands at
only 10.2 percent of total population, Pakistan telecom sector has been
witnessing an upturn and a remarkable growth since 2003-04 when the
deregulation policies were introduced by the government (which will be
discussed later in this study). It is expected to grow further over the coming
years. According to a forecast done by “Business Monitor International”, a
leading firm, the Access Lines in Service (ALIS) are expected to reach 10
million in year 2007 from only 4.6 million in 2004. It is also expected that
the Fixed Line teledensity will grow from 2.9% in 2004 to 7.1% in 2007, and
cellular subscribers would reach 33 million in 2007 with a cellular penetration
of 21% Economic Survey, 2004-05), (PTA Industry Analysis Report, 2004, p. 13)
b. Target location description
The Islamic Republic of Pakistan is a
Southern Asian country whose borders are shared with Iran and Afghanistan on
the west, China on the North, India on the East and Arabian Sea on the South,
with total area of 803,940 sq km. It possesses a very strategic location not
only because it is the main route to the untapped market of Afghanistan but
also because it is an essential gateway to the whole regional market which
would be in deed a very strategic and essential location for Etisilat Intl. to
further itself into other regional countries and territories (PTA, 2004,
Industry Analysis Report).
Before Pakistan became independent from UK
in 1947, it was part of India. Therefore, tension over some territories like
the Kashmir region has been erupting ever since between the two neighbours.
However, the political situation between Pakistan and India has witnessed some
relieve recently.
Pakistan is a federation of four provinces:
Punjab, Sindh, North-West Frontier and Baluchistan; and one Federal Capital
territory of Islamabad. Main economic cities are Karatchi, Lahore and Gwadar
(CIA-The World Factbook).
Despite the enormous efforts over the last
decades by the (by then) monopolistic state-owned, fixed-line Pakistan Telecom
Company Limited (PTCL) to introduce telecom infrastructure and technology
throughout the whole country, many parts (especially rural) are still out of
coverage. In terms of provincial teledensity, Punjab recorded the highest of
3.4% in 2003-04, while Baluchistan stood at 1.5% representing the lowest of
total teledensity. Compared with other neighbouring and regional
countries, Pakistan still far behind with its telecommunication industry. This
pinpoints the huge untapped potential for investment and development.
PTCL which is currently owned up to 88
percent by the government is operating all over Pakistan. It offered a 26
percent manage-and-control equity stake of the company to foreign developers
last fiscal year. PTCL, which is the backbone of the fixed-line networks, would
further play a very important role with the new winner to provide
infrastructure and coverage for all the remaining parts all over Pakistan
territory and further develop existing networks (PTA, 2004, Industry Analysis
Report).
c. Cultural characteristics
Pakistan is a mixture of different ethnic
groups and languages with a multitude of cultures. There are the Punjabi,
Sindhi, Pashtun, Baloch and Muhajir. Almost each one of these groups speaks its
own language. However, Urdu and English are the official languages in whole
country. Therefore, the language can never be an obstacle for foreign investors
in Pakistan as long as they speak English, the world’s communication language (Statistics Division Government of
Pakistan, 2003).
Generally, there are no major cultural
restrictions for foreigners in Pakistan, except the traditional dress code,
Shalwar-Qamiz, “- a long, loose, non-revealing garment worn by both men and
women”. This is a very important cultural characteristic that Pakistanis are
proud of and expect all foreigners living in Pakistan to comply with (http://www.lonelyplanet.com/destinations/indian_subcontinent/pakistan/culture.htm).
For Etisalat Company to operate in Pakistan
there should be no major obstacles regarding culture and tradition for many
Pakistanis have been living and working in the UAE for years, hence Pakistani
culture is well known by Emaratis. Not only this, but since the large number of
Pakistanis living in the UAE have been registering very heavy call traffic
between the two countries over the years using the monopoly services, Etisalat
is already well-known by many Pakistanis even before entering their local
market.
Another important factor is the religion.
In Pakistan, almost all Pakistanis are Muslim. This again makes it easier for
Etisalat to operate in Pakistan because sharing the same believes can help in
understanding general ethical issues of the business environment especially in
sectors like media and telecom. Furthermore, sharing the same religion assists
further integration of the employees in general.
Taking in account other major minorities
like Christians, Hindus and Parsees, Etisalat would not have problems dealing
with them hence about 80% of the total population in the UAE is expatriate of
which more than 60% come from the Indian Subcontinent.
d. Workforce characteristics
The English speaking Pakistani workforce has gained a reputation for
being one of the hardest working world-wide. It is also one of the
cost-effective in the world and supports very high return on investment.
Whereas a large number of the workforce is domestically well skilled through a
network of training institutes provided by the government, many of the
Pakistani labour force gain their skills from studying in developed countries
and employment in the Middle East (especially Gulf countries) (Board of
Investment, 2001, pp.1,6)
Although literacy still stands at only 53
percent of total population, Pakistan is a land with enormous human and
intellectual potential. In this regard, the government has established many
kinds of institutions and training centres in different parts of Pakistan in
order to support and further develop this potential.
According to the same survey, the increasing population is consequently leading
to an increase in workforce. This is evident from Pakistan’s workforce figure
of 45.76 million in 2004 as compared to 40.49 million in 2000. The growing rate
of workforce has registered a nearly constant growth of around 2.0 percent over
the years.
In
addition to the increase in workforce, total employment grew by 2.87 million
(7.4 percent) from 2001-02 to 2004-05, whereas unemployment registered an increase
of just 0.3 million. This again is an indication of the successful effort taken
by the government to generate job vacancies and reduce unemployment (Economic
Survey 2004-05, chap. 13, p. 146).
A very
successful policy of GoP reduce unemployment is to export skilled as well as
unskilled Pakistani labour force to work abroad which does not only reduce
unemployment and population domestically but also creates an important source
of foreign exchange inflow into the Pakistani economy. The fiscal year 2004-05,
Pakistani living abroad sent home about $ 4billion remittances. This was the
second largest income from foreign exchange earnings after exports (2004-05, p. 142).
Telecom
sector has been declared as a priority area for employment and poverty reduction
by GoP in year 2004. By issuing new licenses in the telecom sector,
approximately 370,000 direct and indirect employment opportunities have been
created. Indirect employment would be provided through franchises, vendors and
distributors of the telecom companies entered in the telecom market of
Pakistan. PTCL alone is currently employing more than 60.000 employees in
different parts of the country.
The table bellow shows direct and indirect
employment in the different services of the telecom sector:
Employment in Telecom
Sector
|
||
Current Status
|
||
Service Direct
|
Employment in
2004
|
Indirect
Employment
|
Cellular Mobile
|
3,309
|
18,289
|
Long distance International
|
313
|
6,780
|
Wireless Local Loop
|
628
|
4,032
|
Local Loop
|
69
|
70
|
Payphones
|
144,720
|
144,720
|
Manufacturing
|
1,133
|
2,820
|
ISPs
|
312
|
624
|
Sets & Accessories Sellers
|
6,000
|
120
|
Grand Total
|
156,484
|
177,455
|
Source: Pakistan Telecom Authority (PTA), Islamabad
e. Relevant trade and investment policies and laws
Most of the economic sectors in Pakistan are open to
foreign direct investment. The government has been working on improving the
investment policy regime, "offering fiscal and tariff relief and providing
comprehensive facilitation services" in order "to create an
investment friendly environment, with a focus on further opening up the economy
and marketing the potential for direct foreign investment" (BOI, 2001,
p.5).
Pakistan telecom sector is governed and regulated by
Pakistan Telecom Authority (PTA), a government body that was established early
1997. Since then, PTA has been responsible for all rules, regulations or
de-regulations and policies concerning the telecommunication industry (PTA
website).
In fiscal year 2003-04, the government of
Pakistan announced telecom deregulation policies for both the fixed-line and
mobile sector to liberalise the market and open it up for foreign direct
investment. The monopoly of the decade-long state-owned fixed-line PTCL came to
an end, and two international mobile companies, Telenor of Norway and Warid of
UAE, were granted licenses (PTA Industry Report, 2004).
PTA has introduced a number of general and
financial incentives such as reduction and exemption of tariff and taxes (other
than the 15% Sales Tax) to
encourage local and international telecom investors and developers. For
example, a minimum foreign equity is no longer required for foreigners to start
up business in the telecom sector since 2004.
Furthermore,
foreign investors are now allowed to hold 100% of equity with full repatriation
of profit.
f. Politics and laws that may affect entry
Pakistan’s political instability internally as well externally had costly
affected and delayed the economic growth over decades. Despite the fact that
some domestic violence still erupting in some places, however, the external
political situation has been showing major improvement over the last three to
four years, especially after the strategic assistance Pakistan has provided
during the US-led war on terror in Afghanistan in 2001. This ease in
international political situation has reflected positively on the overall
economy of Pakistan and helped the Pakistani government take confident and
successful economic decisions.
Pakistan's major Trading Partners are US,
Japan, Germany, UK, Saudi Arabia and UAE. It is a member in regional and
international forums such as the World Trade Organization (WTO) which it joined
in 1995, South Asian Association for Regional Cooperation (SAARC), the
Economic Cooperation Organization (ECO) and the Organization of Islamic
Conference (OIC).
g. Market transition and financial market issues
Pakistan’s economy is no longer
fragile and its balance of payments is no more vulnerable to external shocks
for it has been showing a tremendous growth over the consecutive three years.
This growth can be mainly attributed to some important internal as well as
external factors, such as:
·
the wide ranging structural reforms,
·
prudent macroeconomic policies including privatisation and FDI policies
·
financial discipline most importantly the very successful issuance of
Euro and Islamic Bond (Sukuk) that have attracted a large FDI
·
growing domestic demand
·
confidence of private sector
·
reduction of tariff and taxes in many sector especially telecom
·
very high exports and imports,
·
high workers‘ remittance about $4billion
·
competitive exchange rates
·
rising oil prices
·
remarkable decline in countries public and external debts
·
exemption of foreign debts as well as poverty reduction by the International Monetary Fund (IMF),
·
large amounts of loans and lending by international organisations and
banks such as The World Bank and the Asian Development Bank
·
and last but not least the continuous financial support
by the world’s leading economy, USA’s as reward for the Pakistani support
during the US-led war on terror in Afghanistan (Economic Survey 2004-05),
(Economist Intelligence Unit, February 2005, pp. 16-20 Country Report).
Provided with all the above factors,
especially high exports ($14.0 billion last year), four fold increase in
workers’ remittances, increasing FDI (expected to exceed $1.0 billion at year
end), successful performance of Euro and Sukuk Bonds, and the appreciating
Pakistani Rupee (RP), Pakistan foreign reserves has been touching new
levels to reach all time high at $13.0 billion towards end 2004-05
from $ 12.5 billion a year before. This was reflected on Karachi Stock Exchange (KSE) which has
witnessed extra-ordinary volatility during this fiscal year
(Pakistan Economic Survey, 2004-05, Overview of the Economy).
To conclude all the above, it is expected
that after the very significant market transition that took place in the
Pakistani telecom sector after de-regulation and privatisation 2003-04, the
telecom industry would witness further growth in the future
Depending on the large sized population, per-capita income, growth rates,
and a very high local telecom demand (Merrill Lynch,
9 March 2004, Pakistan Strategy, p.
27).
IV. Target market analysis
a. Description of customers and characteristics
Pakistan telecom markets has unique
characteristics of cost and Customers demand structures, Telecom services are
offered to two distinct groups of customers with quite different patterns of
demand, residential customers & business “Public & Private “with Note
of Private sector owns more than 80% of the market share and .the residential
sector is most important in countries with a high penetration of telephones.
If we examine the money spent on telecom,
the business sector becomes much more significant in Pakistan which has near
universal service with the great majority of lines supplied to residential
customers, calculations based on other countries account data indicate that two
thirds of the communication revenue originates from business customers.
An important point in relation to the need
for regulation is that the demand profiles of these groups are quite different.
A few decades ago all customers were demanding the same service – namely
telephony. Business customers were generating more traffic but the service
demand was basically the same. Today many business customers are demanding a
wide range of communication services, which only a few residential customers
consider to be relevant for them. On the other hand cable TV is only of limited
use for business customers and other infotainment services primarily directed
toward residential customers are being developed. Therefore, there is a growing
segmentation between different user groups in terms of markets, services and
interests, the following major market segments exist in Pakistan:
1. Government departments
2. Banks & Insurance companies.
3. Trading companies
4. Small and medium sized companies
5. Courier companies
6. Professionals
7. MNC’s and Corporate users
8. Students
9. Home / Recreational users
b. Estimation of market size
Over Years, slow grew in Pakistan telecom
sector noticed but its rate of growth remained fluctuating. at 2004 the
competition has been introduced in the telecom sector which has shown positive
impact on the growth of the sector in short span of time. It is also expected that
sector will grow further when new operators will roll out their network in the
2005. An account of the size & growth in telecom sector is given below
figure 1.
c. Local competition analysis
The mobile sector is characterized by
robust competition – by four operators, expanding to six by the end of 2005.
The competition in the telecom sector which has been introduced by PTA has been
passing on to the consumer in terms of reduction in tariffs and extension in
coverage. On the eve of Independence Day, Ufone offered free connections and
added approximately 3, 48,000 customers
in just one month. Mobilink, the leading mobile company in Pakistan, is also
offering various packages to attract more customers. Recently, Mobilink offered
free connection with RP. 300 scratch card before it was offered
bundle package and offered free hand set with connection.
At the end of year 2003 the mobile
subscribers were almost 2.4 million which has increased to 6.5 millions till
the end of September 2004. In the year 2003-04 sector grew by 173% (Figure -1).
This unprecedented growth can be attributed to series of events that have taken
place during the year. This includes award of license to two new mobile
companies thus creating competitive environment for existing operators. These
operators have started acquiring market share as much as possible by brining
down the prices of new connections to zero. Similarly, PTA initiates to reduce
activation tax from RP 2000/ to RP.
1000/- [1]
on new mobile connection have played an important role in increasing the
subscriber base as the benefit was completely transferred to the consumers. The
potential for future growth of this sector remains high, as there is pent-up
demand. This is evidenced by the fact that PTCL has over 200,000 pending orders
for new connections at this time. Networks and billing systems cannot really be
used for much else, and their swift obsolescence makes liquidation pretty
difficult.
Porter's 5 Forces Analysis
1 Threat
of New Entrants - No surprise, in the capital-intensive telecom industry
the biggest barrier-to-entry is access to finance. To cover high fixed costs,
serious [2]contenders
typically require a lot of cash. When capital markets are generous, the threat
of competitive entrants escalates. When financing opportunities are less
readily available, the pace of entry slows. Meanwhile, ownership of a telecom
license can represent a huge barrier to entry. In Pakistan still there is also
a finite amount of "good" radio spectrum that lends itself to mobile
voice and data applications. In addition, it is important to remember that
solid operating skills and management experience is fairly scarce, making entry
even more difficult.
2 Power
of Suppliers - At first glance, it might look like telecom equipment
suppliers have considerable bargaining power over telecom operators. Indeed,
without high-tech broadband switching equipment, fibre-optic cables, mobile
handsets and billing software, telecom operators would not be able to do the
job of transmitting voice and data from place to place. But there are actually
a large number of large equipment makers around. Nortel, Lucent, Cisco, Nokia,
Alcatel, Ericsson, Tellabs are just a few of the supplier names. There are
enough vendors, arguably, to dilute bargaining power. The limited pool of
talented managers and engineers, especially those well versed in the latest technologies,
places companies in a weak position in terms of hiring and salaries.
3 Power
of Buyers - With increased choice of telecom products and services, the
bargaining power of buyers is rising. Let's face it; telephone and data
services do not much vary regardless of which companies are selling them. For
the most part, basic services are treated as a commodity. This translates into
customers seeking low prices from companies that offer reliable service. At the
same time, buyer power can vary somewhat among market segments. switching costs
are relatively low for residential telecom customers, they can get higher for
larger business customers, especially those that rely more on customized
products and services.
4 Availability
of Substitutes - Products and services from non-traditional telecom
industries pose serious substitution threats. Cable TV and satellite operators
now compete for buyers. The cable guys, with their own direct lines into homes,
offer broadband Internet services, and satellite links can substitute for
high-speed business networking needs. Railways and energy utility companies are
laying miles of high-capacity telecom network alongside their own track and
pipeline assets. Just as worrying for telecom operators is the Internet: it is
becoming a viable vehicle for cut-rate voice calls. Delivered by ISPs - not
telecom operators - "Internet telephony" could take a big bite out of
telecom companies' core voice revenues.
5 Competitive Rivalry - Competition is
"cut throat". The wave of industry de-regulation together with the
receptive capital markets of the late 2000s paved the way for a rush of new
entrants. New technology is prompting a raft of substitute services. Nearly
everybody already pays for phone services, so all competitors now must lure
customers with lower prices and more exciting services. This tends to drive
industry profitability down. In addition to low profits, the telecom industry
suffers from high exit barriers, mainly due to its specialized equipment.
d. Estimated market share and sales expected
Cellular Sector
Source:
http://www.pta.gov.pk//media/industryanalysisreport
Figure-2 depicts the market share of four
existing mobile operators in Pakistan mobile market. Mobilink being the market leader
owns about 62% market share in terms of cellular subscribers. Ufone the
competitor of Mobilink in GSM has share of about 21% in total subscribers of
the mobiles in Pakistan. Instaphne and Paktel have market share of about 17%.
Recently, Paktel has started GSM service and it is expected it would be able to
add more customers in future. It is also
expected that a healthy competition among 4 existing and two new entrants would
encourage growth by many fold.
Fixed Line Sector
Fixed line Services in Pakistan have also
shown magnificent growth patterns over the years. This has been evident from
the increased teledensity over the years. At 2004 the teledensity has reach to
2.9% which was just 2.2% in year 2000.
PTA has been working towards increasing teledensity; in this regard
PTCL tariffs have been reduced drastically not only for local but also for
nation wide and international calls. PTCL has been forced to bring in schemes
for provision of fixed line connection on easy terms (Industry Analysis Report 2004)
Source:
http://www.pta.gov.pk//media/industryanalysisreport
Geographically,
Punjab is the region which is largely connected with telecom services and has
teledensity 3.4% in the year 2004. Teledensity in the province of Punjab was
2.8% in the previous year. Baluchistan has the lowest teledensity in Pakistan
which is only 1.5% in the year 2004. This is due to the fact that deployment of
network in the areas in Punjab is more cost effective than that of Baluchistan
(Table – 1).
Table-1 Teledensity by Provinces
Year |
Punjab
|
Sindh
|
N.W.F.P
|
Balochistan
|
2001
|
2.4
|
3.0
|
2.0
|
1.3
|
2002
|
2.6
|
3.2
|
2.2
|
1.3
|
2003
|
2.7
|
3.3
|
2.4
|
1.4
|
2004
|
3.4
|
3.5
|
2.7
|
1.5
|
Recently,
PTA has issued licenses for LL and LDI and it is expected that teledensity will
increase as soon as new operators start their services. Similarly 108 licenses
are expected to be given out for WLL services which will be a corner stone in
increasing teledensity in rural areas of Pakistan which is currently very low.
Card Payphones
Card Payphone sector has also shown a
tremendous growth over the years. In the
year 2000-2001 there were only 10,400 card payphones in the country and the
number has reached to 184,669 in July 2004 shown in the Figure -4.
Source:
http://www.pta.gov.pk//media/industryanalysisreport
The
growth in this sector is basically due to liberalized policy, competition,
reduction in regulatory charges and reduction in tariffs of telecom services.
Broad Band/Internet
At 2004 over 1900 cities have access of
internet in Pakistan and strategy in Pakistan is to spread access to as many
cities, towns and villages as possible and as soon as possible. For the
purpose, the Internet bandwidth rates have been reduced drastically, for
specific purposes, receive only, satellite communication has been facilitated
without license requirement.
As evident in Figure 5 there were only 19
Internet service providers in the year 1997-98 which has reached to 126 in the
year 2004.To encourage the growth of the internet in the country, PTA has
decided that in future only two types of license, PTCL region wise and
Nationwide, license will be issued. PTA has set RP. 100,000 license fee for
Region wise license and RP. 300,0002 for
nationwide license. Existing licenses of District/Provincial level will also me
upgraded to regional and national level. PTA has also requested Central Board
of Revenue that internet operators who are using VSAT may be exempted from
Central Excise Duty (CED). One could hope this measure would help to increase
the internet users by many fold.
Sales Expected
The revenues in terms of central excise duty (CED) and general sales tax (GST)
have also increased significantly. Central Board of Revenue (CBR) collected
over RP 2 billion from fixed line and cellular sector during July-August 2004
(in just two months). Total collections from telecom sector in terms of GST/CED
increased by 5% in fiscal year 2004 compare to the previous year as in Figure 6
(http://www.pta.gov.pk)
Following the end of monopoly structure in
basic telephony and introduction of more competition in cellular market of
Pakistan, it is expected that both of sectors will grow considerably in the
next few years. A number of WLL, LL and LDI operators will start to roll out
their networks shortly. A leading firm “Business Monitor International” has
forecasted that Access Lines in Service (ALIS) in Pakistan will surpass the 10
million mark in year 2007 (Figure 6 )
which are only over 4.6 million in the year 2004. It is expected that Fixed
Line teledensity will reach to 7.1% in the year 2007 which is only 2.9% in the
year 2004. Competition in the sector will help to reduce tariffs and improve
the affordability for common man. Mobile sector will also grow considerably
with the entry of two new cellular operators and expansion of networks by
existing operators. It is expected that cellular subscriber's base would reach
to 33 million in the year 2007 and cellular penetration would reach to 21% in
the same year.
VI. Strategic alternatives
a. Market entry Alternatives
Before
we discuss market entry alternatives, we have to recall some events that will
have impact on Etisalat alternatives. Since 2000 Pakistan government has taken
steps to develop Pakistan’s small IT sector. The promulgation of the Telecom
(Re-organisation) Act in 1996 laid the foundation for the rapid development of
the telecommunications sector. The act permitted private investors to
participate in the provision of new telecoms services. More recently, the government
announced fixed- and mobile phone deregulation and established a
quasi-independent regulator, the Pakistan Telecom Authority (PTA) to keep an
eye on the sector.
The
government has already deregulated and privatised selected telecoms services.
There were four mobile phone operators in the country by end-2002. In addition,
there was one radio-paging company, 70 telex, facsimile and private automatic
branch exchange (PABX) service providers, two manufacturers of large digital
exchanges, 60 Internet service providers (ISPs), and more than 20 data network
operators in the private sector, according to the US Foreign Commercial
Service.
Pakistan expects to receive between US$2bn and US$2.5bn
in local and foreign investment in the information technology (IT) and telecoms
sectors during the next two years. (http://www.ebusinessforum.com/index.asp?layout=newdebi&country_id=PK&country=Pakistan&channelid=6&title=Doing+e-business+in+Pakistan, June 2005)
So since July 2003 the government took the following
steps for telecommunication liberalization.
·
Both local loop and long-distance international
dialling are granted for 20 years with no restriction on the total number of
licenses.
·
Licensing for new mobile phone operators through
competitive auction bidding. The license terms are currently 15 years and
policy will be renewed every five years.
Stages
for the telecommunication liberalization are shown in Appendix 1 (Yousef, 2004,
P4). Telecoms development is a high priority for the government. The sector is
currently being liberalized and has made significant strides. Higher
value-added telecoms services are now open to competition, and private-sector
efforts have been encouraging: mobile phone services, card pay phones and
Internet services have grown rapidly in recent years. Fixed line telephony was
a state monopoly until December 2002, dominated by the 88% state-owned Pakistan
Telecommunication Company (PTCL).
Therefore,
there is a potential market for Etisalat to invest more than one
telecommunication service ranging from normal telephone calls to Satellite
communication. The following table indicates Etisalat market entry alternative
and the advantages and disadvantages of each one.
Entry Mode
|
Advantages
|
Disadvantages
|
Etisalat own Subsidiary
|
100% ownership and control.
|
Environment risk factors e.g. Economic
and Political changes will affect the safety of assets.
|
Licensing
|
Faster start-up, lower cost and ability
to access existing technology. It is preferable entry mode due to gradually
increasing number of competitors and Etisalat will be able to access existing
technology e.g. legacy telephone main lines and mobile network.
|
Less control on decision making.
Less Control over its technological
advantages
|
Joint Venture
|
More than 50% control on venture.
|
Sharing the profit with other companies.
|
Equity Alliance
|
More Ownership
|
Different Culture Objectives
|
From Pakistan environment analysis explained earlier,
we know that PTCL had offered 26 percent share for sale. Therefore, the most
suitable entry strategy for Etisalat is Equity Alliance which is Etisalat
favourite strategy in entering the new markets in Africa and Asia. Etisalat can
then have ownership and control and management power over the
government-supported, back-bone of fixed-line sector PTCL. As per the cultural
issues which where discussed earlier in this report, there would be significant
differences.
b. Marketing Alternatives
Etisalat
will over multiple services in Pakistan. Therefore, to determine the potential
demand for each service they should estimate carefully the possible sales for
each service. As an entry strategy Etisalat may offer a portion of its services
line.
Marketing
can be done online or using the traditional way. Using online marketing
customers can use Etisalat web site to quickly compare prices from different
competitors. Online advertisement includes also banner advertisement and target
email offers. On the other hand, Etisalat can employ traditional marketing
techniques used domestically through media like TV and Newspaper ads where
message interpretation is almost the same. In addition they can give free
subscription for internet services and extra talking minutes for mobile calls
to attract the largest number of customers.
Services
price should match middle income people expectations. As well as services
should be distributed on main cities where large population is.
c. Human Resource Alternatives
Etisalat
has well based Human Resource structure for managing its international
business. For top management positions Etisalat depends on its own people from
the head office to set up the business because they know the company procedures
and structure, and thus more likely to implement Etisalat Global strategies.
Those managers are host country managers. They could be UAE nationals or
expatriates managers (Third Country nationals) from the headquarters. For sure
Etisalat have high competent local executive managers in all different levels
of management hierarchy who made Etisalat as Telecommunication leader.
Accordingly, human resource will select and transfer the best manager to the
open job. This is known as geocentric staffing policy (2000, P381). This will
help in maintaining Etisalat unified culture and tighter control.
Balance
Sheet Approach is recommended for compensating those managers where each
expatriate should enjoy the same standard of living they had at UAE (Overran,
2000, p. 87).
In
the early stages of operation development, it is necessarily to have managers
with cultural and political skills. Pakistani managers will be favourable
because this will eliminate any culture difference. Once basic contact network
has been established and Etisalat start to gain experience in market and
country culture, traditional managerial and technical skills become
progressively more important. At a later stage, managers from the head office
can be kept to a minimum and gradually rotate them. Etisalat policy is that six
months is the maximum period a manager can stay abroad.
Training
is also important at the early stages to brief managers about life conditions
in Pakistan. Since the cultural difference between UAE and Pakistan is modest
the training will focus on how attitudes (positive and negative) are formed and
how they influence behaviour, and there impact on business outcomes. For
example how they respond to and treat the new Pakistani subordinates. Also
mangers can be enrolled in an internet cross cultural training which is a self
training multimedia package. It uses short videos to introduce inter-cultural
problems and then guides managers how to handle the situation. It is remarkable
project from Etisalat to prepare its people who travelling overseas and it
covers different cultures in different countries where Etislalat is operating.
d. Organizational
structure
As
mentioned earlier, Pakistan consists of four provinces and a capital territory:
Punjab, Sindh, North-West Frontier, Baluchistan, and the Federal Capital
territory of Islamabad. Hence there are some political and cultural differences
between each region; it is recommended that Etisalat go by region in regard of organization,
peroration and control, starting from the better infrastructured, more sophisticated
provinces like the capital, Punjab and Sind, expanding into the less ones like
N.W.F.P and Balochistan.
VI. Implementation of strategic plan
Etisalat
plans to aggressively bid for the 26% stake offered by PTCL along with the
management control. Considering Pakistan market as its hub for expansion in the
Asian market with its huge untapped potential of some virgin markets like
Afghanistan and Bangladesh, Etisalat will ensure to outbid its competitors.
The other
advantage that Etisalat has over its competitor bidders is the proximity to the
location and similarity (to an extent) and familiarity with the target country
culture.
Considering
the huge capital investment and Long-term objectives the company Etisalat should
try to be the market leader in Pakistan market and dominate the Pakistan market
as it does in its domestic market. It should not go for short-term objective of
profits without being the market leader.
Pakistan
being a huge and diversified market with different local preferences based on
the different regions comprised in the four provinces and capital territory,
Etisalat should cover the market region wise. First it will cover the regions
with established infrastructure provided by the PTCL and through its media
campaigns and placement of its products as "best products, affordable to
all" try to make sure that masses find it affordable and identify with its
image locally e.g. regions like Punjan and Sind. Parallel it will setup the
infrastructure in the nonexistent regions (like N.W.F.P and Balochistan) and
create a new market and tap the untapped potential. Here the speed of set will
be important as other competitors may come in and do the same.
The
company should also go for the Niche market and place itself as one of the best
in the Industry to ensure that the customer feels proud to associate with the
best in the industry. At the same time it will ensure that the prices offered
are competitive, keeping in mind the bulk of the Pakistani customers and tapping
of the yet untapped potentials.
Etisalat
should invest heavily on the infrastructure to ensure full coverage of the
Pakistan market with expansion potential to cover neighboring markets in
future. The finance could be provided easily from its already cash laden
domestic status along with the excellent support available from the banks in
its domestic market.
Etisalat
should also depute its senior managers, who are familiar with the company's
objectives and procedures. The product and services offered would be on the
similar line as in the home country to take advantage of the scale of economies
but of course, the lower cost and local preferences will be tailored into
accordingly.
Its
Management is already familiar with the Pakistan culture and various cultural
issues as most of the staff in the home country is from Pakistan and
neighboring regions. Etisalat will adapt suitably to the local environment and
operate thorough multi-domestic strategy. This will also give Etisalat the
control over the existing labor and management who can be suitably adapted to
the corporate objectives and culture.
The
company should invest into training and development of the local talent to
ensure its long-term objectives and extension of its existing corporate
culture.
Etisalat
should avoid startup inefficiencies by going in with PTCL to ensure ready
market base and capitalize on its own and PTCL's brand image to build its
customer base from existing and new customers.
It
also should go for extensive Marketing via the Media Viz. Radio, T.V,
Billboards, promotions and sponsoring of local events to create market
awareness and identify with the masses, gain "the goodwill and brand
identification important to the marketing of mass consumer
products"(Daniels pg. 251)
Etisalat
should increase demand for telecommunication services and at the same time
decreasing the costs of service due to economic of scale, offer better quality
communication networks, increase customer choices and offer competitive prices.
Etisalat envisages implementing market penetration and
market development strategy region wise.
Appendices
- Table of stages of telecommunication liberalization in Pakistan
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