Expansion of Optus Mobile Report

Executive Summary

The report below is one that looks into the possibility of expanding an existing internet and service provider “Optus” from its mother land in Australia to a potential ground in Kenya, Africa.

The main agenda, first of all, will be to look into a brief history of Optus, and then consider its ability in expanding to Kenya. We are going to look into some of the Human resource functions that may affect the move/expansion of Optus to Kenya, and here we will focus on recruitment and selection of employees and also we will focus on performance management that is required on these new grounds.

Finally we are going to look into some of the recommendations that are to be proposed for the company to be launched and to be effective as a new one in Kenya.

Introduction

Being part of our day to day modern life, mobile phones are in a very fast rate becoming the in thing in the market. With the amount of capabilities that a single handset can perform; from simply receiving and making phone calls, internet capabilities like surfing, real time chatting, media recording, storing and viewing and a myriad of other useful capabilities, phones are becoming very reliable in today’s society. Every single person in any industry is likely to find some use in a mobile phone; from the preacher behind the pulpit, to the grocery retail seller, to the parliamentarian, even to some random beggar on the street. From the office to the home, we all have a desire to keep in touch with the latest fashion, gossip, and news: and all this can be done by the touch of a button through well advanced mobile technology. In the past, mobile phones have had their share of problems, especially in getting access to reliable service providers, but of late, this has evidently been faced off, with even the third world companies having recorded one of the highest annual growths in mobile technology and usage. Menguy (2007, para.5) argues that for a country like Kenya, if a Kenyan who earns around $400 in one year would analyze his use of a mobile phone, it would get a whooping 35% of his expenditure.

It is for this reason that I have chosen to write a report including a case study of the working of the mobile industry in Kenya, so that Optus, the company I am working for can consider expanding its wings to this country. The country’s potential when comes to the mobile market is amazing, and service provision through such providers as Safaricom, Zain and Econet wireless, (Wanjiku, 2010, para.3) have given mobile suppliers like Optus, an easier passage to this market, being a private industry in Australia. At the end of this work, we will have given an overview of the company Optus, giving a detailed report of what type of industry it is. We will also look at the Human Resource details of the company and the rationale of expansion. We will also find out more about Kenya, their national culture and some of the challenges we are bound to face as a company, exploring the legal and ethical considerations about the country. Finally, I am going to provide some of the recommendations about the expansion, including International business and cultural strategies.

Brief History of Optus

Having been a threat to the then outstanding monopoly in the industry Telstra, Optus has grown to be the first private internet service provider , having had acquired the second licensing bid in the country. It began operations in 1992 (Superbrands Australia, n.d. para.4). The majority shareholder in the company has been Cable & Wireless since 1998 and took a major role in running the company. After it dropped this role in 2000, major shareholding was taken up by SingTel which thus became its new owner since then on. To date Optus is still a leading service distributor and stretching its wings to a large area in the Asian continent. Its stability and reliability are one of the major advantages over other distribution companies thus giving it a leap over other companies that exist in Australia.

Optus gets to provide its services to more than six million customers in Australia every passing day, and also provides internet services subscription television and further satellite services to its customers. Through its commence of the 3G network in 2005, the services were greatly upgraded from the core IP network. A whooping An$800million in investment has been poured to expanding coverage of its network thus giving it headway beyond its major competitors. With a working force of around thirty three thousand in staff duty, the company is a well established one in Australia.

Human Resource

One of the latest developments concerning the company is its resent ability to house six thousand of its employees in its own headquarters, on an 84,000 sq. campus in North West Sydney. Human Resource Management in Optus has always been individually based, with its executives in H.R. management wanting to connect with its staff on a one on one basis. The company often avoids the role of unions in determining the conditions that the employees work in. To do so, it negotiated a deal with the workers union of the country, Communications Workers Union (CWU). In this way, the company provided a more flexible and easier working condition for the employees than from its counterpart Telstra. All this happened in 1992 when 89% of the representatives voted for the company to work independently with its workers. (Katz, Darbishire, 2002, pp 162-163, para.1). Being an excellent example of a nonunion human resource employee, the company provides some benefits to its workers, for example, family- leave benefits. This is not the case with its neighborhood competitor Telstra, who avoid giving benefits such as these to its staff. Not only so, but the company provides a group savings scheme that is quite beneficial to its members. The workers have access to a website where they can acquire all sorts of information about the scheme. Not only so, but they can also get access to whatever kind of a loan they are intending to undertake under the constitution of the union. Loans can be borrowed and paid back over a three to ten year basis design depending on the aspects of the scheme (Friends International Provident, 2010, para.5).

Reason for Expansion (Rationale)

After looking at the market in south Saharan Africa, and also looking at some of the numbers in the market in terms of telecommunication, I have come to the understanding that it is quite a viable idea to propose a move for Optus so as to increase its market internationally. The telecommunications industry in this region is quite young, starting just over around five years ago, with a great deal of potential surrounding it. Kenya, in particular, is a fast growing economy, with a population of up to forty million, 70% of whom are the youth. As mentioned earlier, service providers such as Safaricom are a monopoly in the telecommunications industry, having just a little competition from rivals Zain and Econet. These are smaller companies in the country, yet bigger ones internationally. I talk of Kenya as an investment option because of late, it has been awarded internationally as the fastest growing rate in terms of telecommunication, not only in Africa but worldwide.

The telecommunications industry in Kenya provides for around 5% of the workforce in the country some employment: both formal and informal, yet the service reaches a whooping 20,000,000 people in the country. The Ministry of Telecommunications has mandated the Kenya Communications Act as the legal framework that is in charge of all communications in the country: be it in the private or the public sector. The industry is well regulated by the Communications Commission of Kenya and is also facilitated by the Kenya Post and Telecommunications Corporation. The communications industry also submits to the World Trade Organization and therefore is well linked with the international community (.Zeleza & Kakoma, p 204, para.3)

With Safaricom being the main service provider, it is currently reaching a vast population of about ten million. It is way ahead of its competitors, followed further down by Zain, which is an international company, recording one of its only losses in Kenya. After this comes Econet which has recently introduces its brand “Orange” in Kenya as another service provider (Brandkemistry, 2008, para.1). Around two thirds of the population has access to some kind of telecommunications service and this makes the country quite a good market for the company. Although the country is a third world country, telecommunication, and the urge of acquiring information has captured the Kenyan youth like a blast. Kenya’s policy and goal for the communications industry is to develop and sustain reliable and efficient communication for development countrywide; and this has been effectively included in the “Vision 2030”: a vision that the country wants to aggressively embrace.

PEST Analysis

We may want to touch on the main factor that directly affects business, internally and externally: political atmosphere of the country. Unlike its neighbors Somalia and most of Sudan and Ethiopia, the country has experienced political stability despite the differences in culture that the 44 tribes have. Except for the unrest that was experienced in the 2007’s general elections, the country goes a long way in terms of peace and tranquility and this provides a good atmosphere to do business for anyone who is interested in contributing in the economy of the country.

Employment is generally governed by the “General Law of Contract”. Employment is viewed as an individual agreement in terms of contract between the employer and the employee. Apart from a few specific laws that the parliament has passed for special cases, freedom for business as pertains to the international community is allowed and welcomed.

The economy of the country after the 2002 general elections has constantly be on the rise, recording a GDP high of 7.0 and 5.0 in 2007 and 2008 respectively (Index Mundi, 2010). The Australian dollar is exchanged at Ksh. 66.08 while that of the U.S. dollar goes for Ksh. 79.95. As per December 2009, Kenya’s inflation rate was at 5.3% , a figure that has slowly been diminishing due to the new reforms the country is putting in place as foundational pillars of the Vision 2030 (Njoroge, 2010, para.1).

In terms of social factors that make up Kenya, the census that was last carried in 1999 saw the country standing at 28.7million a leap of 10million from the previous census count, with 70% of the population aging between 18 to 35years.

Difference in Culture

One of the only similarities in history that Australia and Kenya share is the fact that both countries were colonized by the same emperor: England. Both had to submit to the same national policy and sing the same national anthem. Australia though, after gaining independence have shown that they are not a people who are quick in rushing towards making major decisions; evident by the issue of introducing a new national anthem (Australian Government, 2007).

Kenya on the other hand is very patriotic and conservative. With a range in culture caused by the different communities that make up the country, Kenya remains to be one of the most unique countries in the face of Africa, experiencing little or no civil war, caused by tribal unrest. Forty three is the number of tribes that make up the forty four million populations in the country. The international community recognizes the country due to its tourism attraction, boasting of hosting the world’s eighth wonder of the world: the wildebeest migration in the Tsavo National Park. Wildlife has therefore captured a large part of the country’s economy and this has easily become Kenya’s gateway to the international community.

Australia is way more modernized than Kenya, with its telecommunications industry being way more advanced than that in Kenya. Most of the population in the country lives in towns and cities in Australia, with only about 10% living in the countryside. Most of the population is also well versed with the Information and Communication Technology (ICT) that is sweeping across the world. Internet accessibility is way better in Australia than in Kenya and is also way cheaper. Australia gains more in the manufacturing industry, the tourism industry and also what we are discussing in this paper, the ICT. It has a greater population serving and being served by this industry in the urban areas and this provides a good environment for “harvesting” customers, as a service provider. On the contrary, in Kenya, the economy is more agricultural based than it is based on the manufacturing industry. Most of the population is in the rural area of Kenya, but now gradually shifting towards the three major cities: Nairobi, Mombasa, and Kisumu. Agriculture is still practiced in small scale, with many of those in the rural areas still using traditional farming and grazing methods to get a living.

But for the majority who are city dwellers, almost 95% of the adults own a handset and even the same number are gaining an interest in the internet, due to its vast access to information. All the same, rural and urban dwellers are contributors to the telecommunications industry. Many have grown to be transformed, now embracing telecommunications technology, as much as they are holding on to their culture and tradition. It is very easy, as you travel along the country side, to observe a herdsman closing a deal for the sale of some of his cattle through a mobile phone (Ikwueme, 2010, para.6).

Human Resource functions

Recruitment and selection of Potential Employees

The public sector in Kenya employees up to 350000 people with almost half of them being teachers. The sector is viciously guarded by Central Organization of Trade Union (COTU) that represents the rights of the workers under them. It is therefore advised for Optus to join as part of the private sector. The government of Kenya has echoed its desire for international inventors to join the private sector of the company and has made deliberate efforts to welcome them. Many of the duties on imports that were previously in place in the country’s ports have now been slashed off paving way for a good trade environment between Kenya and foreign countries. The private sector, specifically, provides employment for the rest of the formal jobs in the country. With more and more university grandaunts in need of employment, it will be of mutual benefit for the company to be involved in the Kenyan market. The ICT graduates in Kenya are on the up rise. Most of the courses that are undertaken in local universities are international courses and are very wide in content. Most of the Public universities are now providing courses that are especially relevant to this company: From Electrical Engineering, to graduates of Information Technology, Telecommunications Engineering and Computer Science. We also have graduates in Bachelor of Science in Statistics, Physics and Mathematics, who have the knowledge and skill to run the ground work in this sector. Students taking marketing courses are also taking up majority of the university population and this will be necessary for creating the basis for our company’s branding and advertising.

For both public and private sector, the government has given the freedom of association under Article 80 of the constitution (International Labor Law, 2006, para.18). In the same article are some of the details necessary to understand the working environment of the country and the minimum number of employees a company like Optus can employ. These are reasonable conditions that are required by the Registrar of Trade Unions.

We may also be required to look into the logistics of working conditions of the employees. Much of the Australian workforce works in shifts that have a maximum rate of four hours. Most of them count working hours in terms of “hours per week” while the Kenyan working force are used to counting their working hours in terms of “hours per day”. The workforce is not yet fully adopted to working especially with night time shift and this will therefore have to be considered as we plan on the human resource management issues in Kenya. Nevertheless, a vast population is comfortable working up to eight or nine hours in a day and this will transform to an approximate of forty five hours a week inclusive of working into the weekends for shorter hours (which many have already adopted to). General attire in the office is the official type of clothing for most of the formal working sector.

Performance Management

The strategies in business that should be used should connect well with the locals. Just like the leading service provider, one of its major strengths is its ability to connect with the brand name as part of their culture. As a new brand in the market, one of the business strategies would probably be to involve the culture of the Kenyan people into our product. As the Kenyan people hold on to a lot of their tradition, it is important to take this into consideration when coming up with the brand name. Goals are also to be set out in a way that will attract a maximum number of people towards subscribing to this network. The goals strategy should look into how many people have successfully registered as subscribers to this network at a certain time. The performance cycle that successively includes goals, structure, targets, appraisal, improvement, development and finally review of a project should be taken into deep consideration as part of management structure of the company (TACK International, 2009, para.4).

Most of what is planned out by the company in terms of vision, objective, mission and administrative structure in its eighteen years of operation can trickle down to the expansion to this region. With a set up of the company’s wing in one of the urban areas (especially Nairobi), the project can be launched and can even be managed locally with no much concern. Nairobi being the forth most developed cities in Africa, will provide an excellent hub for business especially in this lucrative business opportunity. The population also is intensively waiting for new ventures in employment, as well as new competition in network providers who will increase the amount of competition for their own benefit as consumers to this service.

Some Human Resource issues to be considered

Probably the most prominent Human Resource issue that not only Kenya, but the rest of the world is trying to deal with is diversity in the work force. Kenya contains a mixture of 44different tribes that are clustered together ethnically in the rural areas. Nevertheless, the cities have them all mixed up together. The country’s law has it that no one ethnic tribe is to be discriminated against, and this provides a challenge to our company to equally balance out the workforce in terms of tribe. In the same light, partially impaired people need to be considered in order to avoid discriminatory issues especially with the law of the land. Gender sensitivity is another challenge, whereby the work ethic in Kenya sensitizes closely the issue of gender

Productivity should be considered as another issue. It will be of no use to have a workforce which does not meet the production standards that are stipulated by Optus. Professionalism in the work area should be greatly considered. Vigorous attempts to get the right kind of people to do particular tasks should be made. Interviews and aptitude tests are to be done with proper clarity and openness.

Even after getting the people to do the job, another human resource challenge is to have adequate training for the workforce. Budgetary measure should be undertaken to make sure that the workforce is worth its pay. In doing so, the company avoids losses caused under qualified staff. Besides, training is one of the most beneficial tools for employee development.

Recommendations

For the project to be successful one may want to include some of the pointers that are given below. Administratively, the project should be an independent one with affiliation to the mother company. New grounds may require new rules and new strategies in order to be successful in the same. A reconnaissance may need to be carried out in order to know exactly what is lacking in the telecommunications industry in Kenya (mainly regarding cheaper ways of accessing high speed internet), so that Optus may be able to provide it in a well balanced out way in terms of numbers in the market.

In addition, we may need to involve the local working force in running most of the administrative and operational duties. The reason for this is because the locals connect better with the common man that is being provided with the service. With the inclusion of young, energetic professionals in administration and in the marketing sector of the company, it will be easier and faster to get hold of greater numbers.

When it comes to branding and marketing, the Kenyans will want to associate more with what is seen as their own. Using “Swahili” (the local dialect) to come up with the brand name will be way more preferable than using a foreign name. The idea in all this is to gain numbers in term of subscribers and users of our services instead of rushing into making profits over the first periods of commence of the project. Marketing may also not just involve media notification of the public about our product, but will involve an aggressive attempt to go down to the grassroots and enticing the common man into jumping onto our side. It will involve setting up camp around public grounds in and around the main cities in order to sensitize the consumers about our product.

Also in the line of marketing, big companies that are constantly in need of internet provision should be another of our targets. With the assets that we possess as a company, like the satellite coverage that we have, and with a lot of aggressive marketing, we may be able to direct a lot of attraction towards ourselves.

Employees should follow the code of work ethic that we will create, yet at the same time should be allowed to work within the culture and ethic of work that can be afforded by the general society. Wages and salaries for different job groups should be include in the reconnaissance in order to offer reliable and competitive packages for the employees.

Conclusion

Optus is a giant in the telecommunications industry in Australia and its environs. It has enough potential to rise above where it currently stands in more ways than one. Optus has the capabilities of not only expanding towards Kenya, but in most parts of Sub Saharan Africa. Kenya is good for a start though, because unlike most countries that surround it, the country has a stable economy with a lot of advantage for international investors who choose to explore this venture. Like a tourist on a ‘safari’, the telecommunication industry in Kenya is a viable option in Kenya for Optus and should surely be taken into consideration.

Reference List

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5. Index Mundi, 2010, Kenya GDP – real growth rate Web.
6. International Labor Law, 2006, “National Labor Law Profile: Kenya”. Web.
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11. TACK International, 2009, “A briefing note on Performance Management”, para.4.
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13. Zeleza Tiyambe & Kakoma Ibulaimu, 2003, “Science and Technology in Africa, p 204, para.3 Africa World Press.