Etisalat is an international telecommunications firm based in the UAE. Many recognize it as a formidable force in data and voice services across the Middle East, Africa and Asia. The organization’s net revenue illustrates this; on this basis, the company lies among the top 150 most profitable organizations in the world.
Structural arrangement of the organization
The company has a combination of the area-division structure and the product structure. Under the area division model, the organization divides its entities on the basis of their geographical regions. Through such an approach, the firm can analyze the profitability of each area and thus curve-out a strategy to correct cases of non-delivery. The firm also has a product structure that splits resources on the basis of service portfolios.
Some of them include data services, telephones, mobile network services, internet, sim-card manufacture, training services, financial management and many more (Etisalat, 2011). The company chose this approach owing to the need for greater standardization and specialization. It can also identify the non core or unproductive business services that it can eliminate. Shown below is an organizational chart for the firm.
Forces for change and the obstacles to change in the organization
Currently, the telecommunications sector in the UAE suffers from an oversupply. It is quite difficult for the firm to increase its penetration levels because of this fact. The degree of competition is a force for change because the company needs to innovate in order to ensure its survival. Etisalat faces a lot of competition in its international tariffs.
The company’s competitors and other VoIP providers are causing the company to revisit its international tariffs. The prevalence of rigorous regulations in the international calls sector created these changes. Therefore, the organization needed to respond to these alterations in country regulations. Competition was not just limited to international tariffs; it also grew rapidly in the mobile data sector.
Many rivals dwelt on smart phones, and this meant that the company’s voice revenue reduced dramatically. The need to increase its voice revenue was also a force for change.
Increased competition also emanated from the fact that Etisalat was no longer a monopoly in the UAE telecommunications market. Five years ago, a key service provider entered the market, and nothing has remained the same. This company now needs to guard it market share as it has been losing it to the new entrant (George-Cosh, 2010).
Customers also required greater flexibility in connectivity arrangements. These needs applied to almost all product segments; television services, broadband services and fixed voice services. The organization needed to meet these needs promptly. However, it had to increase flexibility in a way that would not strain the consumers’ telecommunications budgets.
The UAE is a high-growth state; it works on developing its economy through different sectors and channels. However, in order to achieve these benefits, the country must have a strong infrastructural base. The communications sector is imperative because it can facilitate greater transmission of oral and written information in voice and data services.
Businesses now require greater convergence between data and voice, and since the Telecommunications Regulatory Authority in the UAE allowed this convergence, then Etisalat needed to respond by giving clients an integrated network.
Some clients did not have access to Etisalat’s services. In other words, the company’s reach was not one hundred percent in the UAE. This meant that it needed to target a new client base with its products and service; this was also another force for change.
Many businesses are facing a lot of pressure to produce or offer their services and products in environmentally friendly conditions (Durant, 1999). Carrying out activities in a green building has become a common requirement for many companies. Furthermore, business practices now address carbon footprints and energy efficiency. Environmental concerns are, therefore, a key driver for change.
Etisalat is a profit making venture, like any other business; therefore, it needs to look for cost cutting measures at all levels. This need is even more pressing now that the UAE telecommunications market has matured. It is imperative for the company to strengthen its position in the market by increasing efficiency in its operations.
|Forces for change in Etisalat||Resistance to Change|
|Customers’ need for greater technology||Staff hesitance, slow company response|
|Dealing with greater competition||Imitation, slow adoption|
|Maximizing technology infrastructure for development||Increased costs|
|Environmentally friendly business practices||Business disruptions|
|Greater international expansion||Unfavorable business climate|
|Cost cutting||Dwindling quality in services|
One of the main obstacles to change in this company includes reduced service offerings that may result for cost cutting measures. Employees may fear all these new changes or may be ill prepared for new technologies. Alternatively, if customers’ needs are always changing, the company may not respond promptly.
With regard to greater competition, the rivals could imitate Etisalat’s new product innovations, and this may minimize company profitability. The need to practice business in an environmentally manner and the need to offer better technology infrastructure may cause increases in costs.
They may also disrupt company flows. All these factors can minimize the incentive to change in the firm. Lastly, the company should consider international expansion, but it may find unfavorable business conditions in a new target market.
Innovations that the organization has introduced
It can be stated that this company has attained a perfect balance between incremental and quantum changes. Its innovations fall in the incremental category because it often improves its products and services (Morgan, 2006).
The organization has achieved this by offering faster speeds for internet connectivity, better connectivity, greater reach and heightened value. It has done this by investing in fiber optic cables or by building its network infrastructures to a satisfactory level. In this regard, the firm has used existing technologies or methods that are not new to the country to alter service and product offerings.
Conversely, the company has also implemented quantum changes. In this regard, the firm has introduced new technologies that did not exist before using breakthrough innovations. One such instance was the 3D TV; another was 4G technology. These emanated from the need to respond to greater pressures in the competitive landscape.
Shown below is a summary of the two types of innovation prevalent in Etisalat
Source: (Morgan, 2006)
How the firm sought to manage innovation through structure, culture and organization
This company responded to the difficulties in penetration levels by developing broadband services and other value added services. Technological introduction of a new generation of handset services and tools ensured that the organization could deal with the shift in company revenue from the voice sector to the data sector. Therefore, innovation was at the heart of this company’s changes.
One of the new services offered by the organization was an initiative called ‘My Plan’. Another scheme was ‘Business Edge’. In both these arrangements, the company sought to give its post paid consumers minutes on their international calls.
Since there was a serious problem with revenue generation in the international calls department, then the organization felt that it was necessary to deal directly with this problem. Additionally, the plans also entailed provision of data bundles to clients (Etisalat, 2011). Since the UAE had a lot of competition in the data sector, then it was only natural to respond to these pressures through such an offering.
On top of these two service packages, Etisalat also created something that addressed the need for greater flexibility in connectivity and that was ‘eLife’. This package allowed consumers to utilize optical fibers in order to access television services, fixed voice services and broadband services at enormous speeds. It also launched that plan at a reasonable price for the market.
Furthermore, the company was the first to initiate 3D television. In fact, technology experts rank the UAE as one of the top five countries in the world that have achieved this fit. The firm also enhanced this need for greater flexibility by launching “Business One Super’ which is a high-speed broadband service that reaches the mass market. This has radically changed the broadband landscape in the UAE.
The organization expanded its service and product reach through a new partnership with JAFZA. It did this in order to offer customers in the Dubai free Zone some of its telecom services. Since some customers did not have access to high quality networks from Etisalat, the firm launched a Fiber – to – the – home network. It hopes to have achieved 100% coverage by the end of 2012 (Etisalat, 2011).
As a response to energy need pressures and green production business practices, the company has launched a brand of 4G technology called Long Term Evolution. In this plan, the firm has combined technology advancement with environmental friendliness.
It has selected fiber optic cables that are exceptionally energy efficient. They also have a smaller carbon footprint. The plan is still on a trial basis, but it can alter the manner in which the company does business.
All the latter responses have dealt with the company’s innovative endeavors. The forces of change also necessitated a need to alter the culture and structure in the organization too. The company changed these elements through a cost optimization program. In the plan, the firm started outsourcing some of its non core services.
Therefore, previous components covered by the international departments were no longer part of the company. Besides this, the organization implemented a cost-cutting measure to improve efficiency.
The company had to change its culture from technology leadership alone to cost efficiency and technology leadership, as well. Value creation is now a prime issue in the company. Furthermore, the business now focuses on sharing its services and infrastructure with different partners in the communications sector. It is likely that the cost optimization program will yield full results at the end of 2012.
The organization has worked on international expansion, as well. It realizes that this is the lifeblood of the company. It intends on dominating the Middle Eastern market through aggressive acquisitions. One such case was in Kuwait through partnerships with Zain.
The company has also worked hand in hand with other kinds of organizations in its existing regional branches in order to meet the needs of the local market. Etisalat is becoming a force to reckon with in the Nigerian telecommunications sector, and this is through a reorganization of the corporate culture within that country (George – Cosh, 2010).
Since this organization has a product-based and regional-based structure, then any creation of new services and products also alters its structure.
When the company introduces a new service, it often places a new body of personnel to be in charge of the product. However, most personnel come from the existing body of staff members in the institution. Most senior level staff emanate from the host countries when the firm engages in expansion strategies.
Etisalat is a leading telecommunications provider in the UAE. It has attained this position through continual investments in technology. Etisalat has also used new-generation products (quantum change) and systematic process-oriented changes (Incremental change) to achieve the same.
The major drivers for change are competition and a changing technological landscape. However, the company must contend with slow employee adoption and ineffective cost efficiencies. If it can tackle these resistors to change, then it will maintain its position as a market leader.
Durant, M. (1999). Managing organizational change. Web. CRF.
Etisalat (2011). Annual report 2010. Web. Etisalat.
George-Cosh, D. (2010). Competition forces change of strategy in Etisalat. Web. The National.
Morgan, G. (2006). Images of organization. Thousand Oaks, Sage.