Harvard University Economics Etisalat Dubai Paper

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Etisalat in Dubai
Try to find out information about this company though the newspapers
and magazines, or the internet.
Write a paper and answer the following questions.
1.
What are the market conditions for this company’s products at this time?
Discuss demand and supply for this company’s products.
What do you expect will happen to the demand and supply for this
company’s product over the next five years? How will this affect the
equilibrium price and equilibrium quantity?
Use graphs in answering the questions above. Explain your graphs.
2.
Is there any producer-producer rivalry in the market for your chosen
company’s product? Explain.
3.
What incentive system does your chosen company use? Do you agree
with their incentive system? Do you think it needs to be changed?
Explain
Is the company you chose a perfectly competitive firm, a monopoly a
monopolistic completion or an oligopoly? Explain.
What pricing mechanism(s) does your chosen company use? Explain.
Do you agree with these pricing mechanism(s)? why or why not?
4.
5.
Paper Guidelines:
•
Your project should be 7 to 12 pages long.
•
Your paper should be double-spaced.
•
Use economic concepts that we will study in class.
•
Logical flow of your material.
•
Clarity of your writing and the organization of your paper.
•
Proper use of footnotes and proper format for your bibliography.
•
Please use footnotes, to show the sources of your quotes.
•
Please include a bibliography, showing your references.
•
Please make sure that your paper is in your own words.
1
INTRODUCTION Choice of Sector Our choice of sector for the financial analysis has been the telecom
sector. Since this has been one of the fastest growing sectors in the world. And a financial analysis is key
in determining the firm’s financial performance. We have chosen the telecom sector listed in Dubai
Financial Market and/or Abu Dhabi stock exchange. The two telecom giants that we have in discussion
here is Etisalat and Du. Etisalat is traded as Emirates Telecommunication Group Company PJSC in Abu
Dhabi Securities Exchange (ADX) while Du is traded as Emirates Integrated Telecommunications
Company PJSC in Dubai Financial Market (DFM). Here’s a brief introduction about both the companies
Etisalat Emirates Telecommunication Group Company PJSC, branded trade name Etisalat is a
multinational Emirati based telecommunications services provider, currently operating in 15 countries
across Asia, the Middle East and Africa. Etisalat is one of the Internet hubs in the Middle East, providing
connectivity to other telecommunications operators in the region. It is also the largest carrier of
international voice traffic in the Middle East and Africa and the 12th largest voice carrier in the world.
The company is headquartered in Abu Dhabi. Du Du’s official name is Emirates Integrated
Telecommunications Company (EITC). It was commercially branded as du in February 2007. It has a
sister concern named Edara established in 2018. Edara is a subsidiary of Emirates Integrated
Telecommunications Company (EITC) commercially branded as Telco Operations. EITC is 39% owned by
Emirates Investment Authority (EIA), 20.08% by Mubadala Development Company, 20% by Emirates
Communications & Technology Company LLC (ECT) and 20.92% by public shareholders. It is listed on the
Dubai Financial Market (DFM) and trades under the name du. Du offers mobile and fixed telephony,
broadband connectivity and IPTV services to individuals, homes and businesses. The company also
provide carrier services for businesses and satellite up/downlink services for TV broadcasters. Ranking
Going by the top-rated companies, we have chosen Etisalat and Du for the financial comparison. Here’s
a quick look into the Income Statement, Balance Sheet and the Cash Flow of both the companies.
Additionally, almost 90 per cent of staff believe that senior leadership is committed to providing high
quality products and services to external customers; and the majority of employees say Etisalat sets
clear performance standards for product and service quality.
One of many initiatives for 2017 included the Spot Recognition Award. “Spot awards are a flexible tool
that empower people to recognise others. Any member of staff can give reward points to colleagues,
which can be converted into credit for their mobile bill payments, or to buy an iPhone or laptop etc.
You can even reward your boss,” says Al Nuaimi. That means rewards don’t only come from the top
down, but can also come from the bottom up and from peers.
Syed Alvi adds: “We constantly challenge ourselves to look at new, innovative ways to engage staff.
Despite prevailing market conditions, we transformed our engagement model in accordance with best
practice model of ‘Five Essential Elements of Well-Being’ – career, social, financial, physical, and
community well-being.”
It means the wellness programme has become more holistic; not only does it provide free health
check-ups for employees, but also gives staff the chance to attend professional talks on stress
management and financial planning, as well as ensuring employees are offered healthy food from a
specialist provider. Wellness is no longer a topic that is only examined for one week a year – there are
now three annual wellness events with interim activities.
2
Team activity day has also been important in increasing engagement. HR allocates budgets to
departments which are entrusted to spend on an activity that benefits all members of the team –
even the contingent workforce.
Syed Alvi explains that Etisalat has stimulated engagement through innovative management tactics: a
unique deployment methodology; engagement committees and a network of ‘Engagement
Champions’; employee feedback mechanisms; and the branding of reward and recognition
programmes.
Because engagement is treated as a prime business initiative, it has become key to driving
performance and the achievement of corporate objectives. “As a major pillar in the HR strategy and
excellence initiatives, employee engagement is also a crucial aspect of the HR strategy roadmap,” says
Alvi.
Etisalat’s staff come from more than 80 countries, which highlights the need for engagement
initiatives to appeal to all cultures, a challenge the business seems to have met. “Our multicultural
and diverse employees are the reason we have formulated so many different best practices which
have led to high engagement,” says Al Nuaimi.
https://www.cipd.ae/news/case-study-etisalat-engagement#gref
As it would be expected from an oligopolistic market, the specifics of the products are largely similar for
both companies. The analysis of the “bundles” of services of the companies, which have been summed
up by Samoglou, shows that the principles of products offers and their pricing are mostly the same for
both companies (par. 1-15). Etisalat an du offer either two services (phone and broadband) or three
(plus television) in a bundle, which is undoubtedly caused by the demand in the market.
Both du and Etisalat emphasize the need for the promotion of technology and have been consciously
investing in its development. In fact, the success of du is at least partially the result of offering a
technologically advanced product (new high-bandwidth mobile applications) that was its trademark and
unique product until 2011 (Amine and Khan 76).
Similarly, Etisalat has always developed technologies, and at the moment, it works on the “fifth
generation mobile broadband” (“Company Profile” par. 4). It is apparent that this technological race is
the result of the fact that the market, for which the companies compete, is technologically savvy and
interested in best-quality products. Apart from that, the image of a reputable provide requires highquality products from Etisalat. Finally, the image of a facilitator also corresponds to better-quality and
newer telecom services.
3
The price obviously depends on the number of services in the bundle and the speed offered by the
company. Unfortunately, the speed options proposed by Etisalat and du are not exactly the same, which
makes the comparison more difficult. For example, there are three speed options for du’s “Talk Surf and
Watch” that include 16, 24, and 100 Mbps while those for Etisalat eLife Triple Play are 10, 20, 100, 300,
500 Mbps. Apart from that, du offers one and the same number of television channels while Etisalat
plans are defined by the type of TV channels that the customer is going to purchase. For example, the
cheapest plan includes only basic channels while a more advanced (and expensive) plan may include
Sport or Movies channels. Also, the highest speed options of Etisalat come together with Premium TV,
which is understandable since these plans are exceptionally expensive.
Despite the fact that the differences in the plans make them somewhat incompatible, it can be pointed
out that the prices of Etisalat include higher numbers. For example, the relatively compatible plan of
100mbps is Dh180 cheaper when the du option is concerned. However, the TV channel package that
comes with these plans is likely to be different. For Etisalat, it is the Premium TV; for du, it is their usual
31-channel TV.
The analysis of these services allows suggesting a couple of conclusions about the companies’ strategies
and their positioning in the market. First of all, Etisalat offers a wider variety of services due to the way it
splits the various TV channel offers. Secondly, this company suggests more expensive and, therefore,
more exclusive options. Du, on the other hand, does not attempt to provide customers with a Dh5000
service bundle, but it offers similarly diversified and technologically advanced service with several
options that are aimed at lower-income customers and those who are willing to acquire a less expensive
plan.
These two different strategies correspond to the companies’ images. Etisalat appears to be a more
mature and accomplished company that offers more upscale service while du is a cheaper but equally
high-quality alternative that is easier to acquire. Apart from that, these strategies illustrate the
development of the competition between the companies and their current positioning in the UAE
market.
4
Etisalat Sources:
Al Gergawi, Mishaal. “How du made etisalat great.” Gulf News, 2009.
Amine, Lyn Suzanne, and Golam Mostafa Khan. “Saudi Telecom: An Example Of Accelerated
Internationalization”. Journal of Islamic Marketing 5.1 (2014): 71-96. Emerald.
“Company Profile.” Etisalat. Etisalat, 2015.
“Du Brand.” Turquoise Brand. Turquoise Brand Limited Incorporated, 2015.
El Gazzar, Shereen. “Du and Etisalat go head to head for fixed-line customers.” The National, 2015.
“Etisalat Brand.” Garden. Garden Branding Agency, n.d.
“Etisalat Group.” Abu Dhabi Securities Exchange. Abu Dhabi Securities Exchange, 2015.
“Etisalat Named Most Powerful Company in UAE.” Khaleej Times, 2012.
George-Cosh, David. “Competition forces change of strategy in Etisalat.” The National, 2010.
“Investor Relations.” Etisalat. Etisalat, 2015.
Mankiw, N. Gregory. Principles of Economics. Mason, OH: Cengage Learning, 2014. Print.
Samoglou, Emmanuel. “Etisalat and du customers paying the price for unwanted TV.” The
National, 2015.
“Shareholders structure.” Du.ae. EITC, 2015.
Temporal, Paul. Islamic Branding And Marketing. Singapore: John Wiley & Sons, 2011. Print.
5
“The World Factbook: The UAE.” CIA. CIA, 2015.
“Who we are.” Du.ae. EITC, 2015.
https://www.mordorintelligence.com/industry-reports/analysis-of-the-telecom-sector-in-the-unitedarab-emirates-industry
https://www.gsma.com/mobileeconomy/wpcontent/uploads/2020/03/GSMA_MobileEconomy2020_MENA_Eng.pdf
https://etisalat.com/en/investors/financial-highlights.jsp
https://etisalat.com/en/whoweare/our-strategy.jsp
https://www.moec.gov.ae/en/-/etisalat
6

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Explanation & Answer:
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oligopoly

incentive system

pricing mechanism

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