Introduction
Etisalat is one of the leading telecommunications companies in the United Arab Emirates. It is the largest operator in the country, with a market share of 54%. The company was founded in 1976 and is headquartered in Abu Dhabi (Omar, 2020).
Etisalat has a strong presence in the UAE, with over 18 million subscribers as of Q3 2018 (Omar, 2020). The company offers mobile, fixed-line, and broadband services to both consumer and business customers. It also offers a wide range of value-added services, including content, data, and enterprise solutions.
Etisalat had a strong financial position, with a reported revenue of AED 46.4 billion in 2017 (Omar, 2020). The company’s net profit was AED 8.4 billion in the same year, with a strong market position in the UAE. The organization is well-positioned to capitalize on the growing demand for telecommunications services in the country. This essay analyzes the macro environment, strategic position, and ways to enhance Etisalat’s competitive advantage through the application of the PESTLE analysis and the Ansoff Matrix of growth.
Blue Ocean Strategy
Blue ocean strategy is a business approach that focuses on creating new markets and generating new demand, rather than competing in existing ones. The term blue ocean is derived from the analogy of the blue ocean versus the red ocean. The blue ocean represents the unexplored market space.
In contrast, the red ocean refers to the existing market space that is crowded with competition (Omar, 2020). The goal of the blue ocean strategy is to create new demand in the blue ocean rather than fight for a share of the existing demand in the red ocean. Etisalat has also invested heavily in marketing and promotion, which has helped to build its brand and increase its visibility in the UAE.
The company has implemented several marketing initiatives, including sponsoring major events and forming partnerships with other businesses. These activities have helped to increase Etisalat’s customer base and market share. Etisalat’s strategy is to focus on providing affordable, high-quality telecommunications services to the mass market rather than targeting the high-end market. The company has invested heavily in infrastructure and has a strong brand presence in the UAE (Omar, 2020). As a result, Etisalat can offer its services at a lower price point than its competitors, making it more accessible to the average consumer.
Moreover, Etisalat has adopted a strategy of sponsoring major events to increase its brand visibility and attract new customers. By sponsoring events, Etisalat can reach a wider audience and create a positive association with its brand. This exposure can help to increase brand awareness and attract new customers. Etisalat has also established partnerships with other businesses, which have helped to increase its customer base (Omar, 2020).
These partnerships have enabled Etisalat to expand its reach and offer its services to a broader audience. Additionally, these partnerships have helped increase brand awareness and build trust in the Etisalat brand. A unique feature introduced by Etisalat is live TV services, which offer a wide range of channels, including many international channels, and allow customers to pause, rewind, and record live TV.
Additionally, Etisalat was the first organization to provide advanced mobile phones and associated services, capturing a new market. It also offered the eSIM service, the first of its kind in the country. eSIM enables customers to use their mobile phones without the need for a physical SIM card, a feature that many firms have struggled to achieve. This attracted a new category of the market that is interested in the new technology that relies on non-SIM cards.
Another key technology established by Etisalat was smart home services, a unique service in the UAE market. The technology enables people to remotely control their home appliances and security systems via a mobile app, allowing customers to save time and energy by managing their homes from anywhere. By introducing the first high-speed broadband network, especially the latest digital premium internet, in the UAE, Etisalat created a new market for broadband services.
This enabled people in the UAE to surf the web, stream videos, and download files at significantly faster speeds than before, a feature that many require (Omar, 2020). Lastly, Etisalat’s prepaid mobile service was the first of its kind in the UAE. The service allowed customers to pay for their mobile service in advance, which was convenient for those who did not want to commit to a long-term contract. This created a new market for prepaid mobile phone users, contributing to the growth of the mobile market in the UAE.
PESTLE Analysis
The macro-environment refers to the overall conditions that exist in the economy and can significantly impact an organization’s business. According to the PESTLE analysis, an organization’s macro environment comprises factors that affect business operations in various ways (Grant, 2019). Each of these aspects contributes to Etisalat’s business status and success in various ways.
Political
The current geopolitical environment in the United Arab Emirates is stable, where Etisalat is based. The country is a federation of seven emirates, each ruled by a hereditary monarch. The federal government is responsible for defense, foreign affairs, and overall policymaking. The political environment in the UAE is generally business-friendly. The UAE has established robust business relations with countries worldwide, making it easy for Etisalat to conduct global transactions.
The government has taken steps to attract foreign investment and has been successful in doing so. The country has a robust legal framework that protects businesses and investors (Grant, 2019). Therefore, Etisalat operates in a stable political environment, allowing it to continue expanding its business. There are, however, some political risks associated with doing business in certain countries. For example, the political situation in Pakistan has been unstable in recent years, leading to disruptions in Etisalat’s business operations in the country.
Economic
The UAE has a diversified economy that is based on oil, gas, tourism, and other sectors. The country has been successful in diversifying its economy away from reliance on oil and gas revenues. The UAE has a strong currency and a healthy balance of payments. The country has a low inflation rate and a relatively stable interest rate. The UAE is a member of the World Trade Organization (WTO) and has signed free trade agreements with several countries.
Therefore, Etisalat thrives in a conducive economic environment, favoring its development. After the COVID-19 pandemic, the economic growth rate decreased to 2.2% in 2021, from 6.1% in 2020, in real GDP terms. However, the rates are expected to rise to approximately 3% by 2026 (United Arab Emirates, n.d.). The growth rate remains positive, ensuring a favorable environment for business.
Social
The UAE has a cosmopolitan society that is tolerant of different cultures and religions. Etisalat has successfully catered to the diverse needs of customers in the UAE, establishing a strong brand and a substantial customer base. The country has a high standard of living and a young population.
The social environment in the UAE is generally favorable for businesses, particularly due to the growing interest in the telecommunications sector among its expatriate population (Wright et al., 2019). The population is well-educated, and there is a high level of disposable income. However, the recent COVID-19 pandemic slowed down business, as there was limited movement of people, which is essential for trade.
Technological
The United Arab Emirates has a highly developed telecommunications infrastructure. The country has a mobile penetration rate of over 150%, and broadband internet is widely available. Etisalat is at the forefront of innovation in the telecommunications sector and has been a pioneer in the rollout of 5G technology.
The UAE is highly invested in research and development, paving the way for Etisalat personnel to make great discoveries in the business sector. The country also offers cloud-based network analysis responses for proper data management. However, the technological environment is constantly changing, and Etisalat must continue to invest in new technologies to maintain its competitive advantage.
Environmental
The UAE is working on reducing its carbon footprint. The country’s government has set a target of reducing the country’s carbon emissions by 16% by 2021. The company adheres to its social responsibilities and aims to meet the needs of its consumers. The UAE has permitted the establishment of TRCSL towers in various locations throughout the region, thereby enhancing the supply of communication services to the population. Thus, Etisalat can expand its business into the previously unreached regions of the UAE.
Legal
The UAE has placed a ban on Voice over Internet Protocol (VoIP) services, which has had a negative impact on businesses like Etisalat, which provides these services. The duopoly in the communication sector in the UAE also makes it difficult for companies like Etisalat to compete, as there are only two major players in the market.
The government ownership of Etisalat causes the bureaucracy to pay more attention to the company, which can make it difficult for the company to make decisions and operate effectively. The UAE has a strong legal framework that protects investors and businesses. The country is a member of the WTO and has signed free trade agreements with several countries. Thus, the UAE’s legal system is generally supportive of business.
Ansoff Matrix
Etisalat’s current strategic focus is on organic growth in its home market, the United Arab Emirates, as well as expanding its operations in other countries in the Middle East and Africa. The company has successfully grown its subscriber base and revenues in recent years. It is now expanding its product and service offerings to continue this growth. The Ansoff Matrix is a tool that helps identify growth opportunities for a company. Four main growth strategies can be identified using the Ansoff Matrix.
Market Penetration
Etisalat could increase its market share in the UAE by offering new and innovative products and services that appeal to a broader range of customers. The action plan could include developing new products that cater to the specific needs of targeted customer segments, such as businesses or families. The company could also consider offering discounts on its products and services to attract new customers (Bindra et al., 2019). Etisalat could increase its marketing and advertising budget to raise awareness of its products and services. The merit associated with this would be increasing the customer base, leading to more sales.
Market Development
In terms of market development, Etisalat executes a plan to expand its operations into new markets in the Middle East and Africa, offering new products and services tailored to the specific needs of these markets. This would come with the advantage of allowing the company to tap into new growth opportunities (Bindra et al., 2019). The company could offer new products and services that are adapted to the specific needs of these new markets. For example, providing mobile banking services in countries where the banking infrastructure is underdeveloped.
Product Development
Another action plan is for Etisalat to develop new products and services that complement its existing offerings. For example, a mobile app would allow customers to manage their accounts and pay their bills online (Bindra et al., 2019). The company can further expand into services not currently offered by its competitors. This would provide customers with a convenient way to manage their accounts and make payments. Etisalat would realise the benefit of increased brand awareness.
Diversification
A profitable activity Etisalat can undertake is diversifying its business by expanding into new industries, which has the merit of differentiating the company from its competitors and attracting new customers. For example, the company can invest in new products and services that are targeted at specific customer segments (Bindra et al., 2019).
For instance, telecommunication services for the healthcare industry can offer a range of health insurance products. Executing the selected growth strategy will require a significant investment of time and resources. However, if successful, it could help Etisalat to maintain its position as one of the leading telecommunications providers in the UAE.
Conclusion
Etisalat is one of the leading telecommunications providers in the United Arab Emirates. The company is aware of the competitive landscape in the UAE and continually innovates to stay ahead of the competition. Etisalat is committed to delivering the best possible service to its customers and continually seeks ways to enhance its offerings. Etisalat is a reliable and innovative telecommunications provider that is aware of the competition in the UAE. The company continually strives to enhance its services and offerings to maintain a competitive edge.
References
Bindra, S., Parameswar, N., & Dhir, S. (2019). Strategic management: The evolution of the Field. Strategic Change, 28(6), 469–478. Web.
Grant, R. M. (2019). Contemporary strategy analysis (10th ed.). John Wiley & Sons, Inc.
Omar, A. (2020). The impact of Big Data Analytics capabilities on competitive advantage applied on “Etisalat Egypt.” The Impact of Big Data Analytics Capabilities on Competitive Advantage Applied on “Etisalat Egypt,” 40(4), 337–356. Web.
Wright, E. W., Hillon, Y. C., Garrido-Lopez, M., & Fowler, D. (2019). A new scorecard for strategic planning. Journal of Business Strategy, 40(2), 50–58. Web.
United Arab Emirates. Country Profiles. (n.d.). Web.