Case Study A Global Investment Marketing Essay

Case Study A Global Investment Marketing Essay A global investment is a difficult mission that requires the assessment of different aspects of potential opportunities in different countries. Moreover, needs serious examination and analysis of success and failure probability. The purpose of this paper is to study the strategy of Etisalat, the United Arab Emirates (UAE) telecommunication company in the Saudi Arabia market as Mobily. Moreover, description, cause and effect of that strategy will be discussed at understand Saudis economy and to identify the total investment in the mobile sector. In addition, an attempt to examine the performance of Mobliy and the obstacles it faced was made. A specially, the difficulty it faced when it started the business in the Saudi market while trying to catch a part of mobile phone market share, managing its business and communicating with its mother company in the UAE. To overcome these obstacles, Mobily created new services for personal and companies to add value for its subscribers to achieve its strategy target. To explain its success in Saudis market, some business information will be discussed evaluating its strategy. Table of Contents: 2- Etisalats globalstrategy 3-SAY GOODBYE TO THE MONOPOLY 4-Mobily Ownership Structure 5-Mobily Objectives 6-STRATEGY 7-HAJJ EFFECT ON PROFITABILITY 8-INFRASTRUCTURE 9-Effect of macro-environmental and micro-environmental on Mobilys marketing mix 2- Etisalats globalstrategy Etisalat is the largest Arab telecommunications firm in the Middle East, with 63 million customers and has launched the most advanced services to the area.( http://www.etisalat.ae) Etisalats strategy is anchored in expanding in international markets and being able to be one of the top-10 telecoms service suppliers in the world. To execute this strategy, Etisalat attempts actually to create the retail of mobile devices around some states in Africa, Asia and the Middle East as Saudi Arabia and Egypt because these countries have shown an increase in GDP, great increase in population and unemployment and Etisalat try to present telecom services and solutions which add value to consumers and facilitates perfect deal with technology. 3-SAY GOODBYE TO THE MONOPOLY In 2004, the only mobile operator was Saudi Telecom Company (STC). At the same time, the mobile penetration rate just was 40%,and there were only 9.2 million customers. When Mobily entered Saudi market in 2005, broke the monopoly. The liberalization of the Saudi Arabian telecommunication sector caused the penetration rate to rise to 109% in 2007, to  assure  of 50% for customers growth. Mobily paid 3.46 billion USD to have the second mobile license in KSA in 2005. Mobily was successful in covering most of Saudi Arabias land with the GSM coverage 97% of populated areas. It was also the first mobile Saudi operator to  initiate  value-added services such as location-based services (LBS) and MMS. 5-Mobily Objectives To be the best work environment in the KSA by caring for their employees. To be Number One at enjoyment their subscribers. To sustain leadership in data applications and services 6-STRATEGY Mobily is successful attainment its long term vision: to change from a pure mobile operator to a multi-functional telecom operator in KSA. Mobily was granted approval by CITC (Communication and Information Technology Commission) to attained 96% of Zajil International Telecom and 99.9% of Bayanat Al Oula which has a WIMAX license, two data service suppliers in KSA in 2008. Mobily is managing the cost of existing operations when its purchase of a 66.6% stake from the Saudi National Fiber Network (SNFN) which substitutes the use of STCs international gateway network. The incomes of the SAR2 billion capital increases are used for funding or upgrading. (http://www.mobily.com.sa) Mobily has built a strong connection with Etisalat of UAE for procurement of resource. This connection might be significant for presenting one of the best plan networks in the world. The revenue of Mobily Company Q2 2010 recorded as 3,972 million showing an increase of 24% over the same quarter last year. Mobilys chairman, ENG. Abdulaziz Alsaghyir mention that the increase of our Q2 revenue is due to the growth in broadband revenues and creating a centre of attention more post-paid consumer, in addition, Mobily has approved its strategy for five year time know as GED planning for expansion, differentiation to supply combined telecom services constructed about fixed and mobile broadband technologies. 7-HAJJ EFFECT ON PROFITABILITY It is expected that around 3 million person visit Saudi Arabia during the Hajj pilgrimage season, which is reflected in Mobilys fourth quarter earnings. Mobily achieved highest quarterly earnings during the fourth quarter. Mobily Quarterly Earnings 8-INFRASTRUCTURE Mobily has finished building its own capacity infrastructure to support itself. On the other hand, when Zain started their business, has rented transmission capacity from both Mobily and STC. This produced an additional flow of income for Mobily and STC depending on Zains usage capacity. (http://www.gulfbase.com) 9-Effect of macro-environmental and micro-environmental on Mobilys marketing mix There are many reasons to the macro-environment that will influence the choices of the managers of any establishment. New laws, tax changes, trade barriers, demographic change and government policy changes are all instances of macro change. To help analyse these reasons or factors managers can categorise them using the PESTEL model. (http://www.oup.com) Kotler (1998) claims that PEST analysis is a helpful strategic tool for distinguishing market growth or reduction, business position, potential and direction for operations. In analyzing the macro-environment, it is essential to understand the factors that might in turn affect a number of critical variables that are likely to affect the companys demand and supply levels (Kotter and Schlesinger, 1991; Johnson and Scholes, 1993). 9.1 Why Saudi Arabia There are few states to be able to propose secure supplies of inexpensive energy, a geographical starting point to a huge market and a customers requirement to achieve a suitable solution for new adventure enterprise or investment. The research has indicated that Saudi Arabia is one of the best 20 destinations for overseas direct investment in the globe. Moreover, Saudi Arabia known as one of the most enterprising nations in the Middle East, Saudis huge natural energy integration with the long-term image and strategic planning to make todays stable, robust economy. Saudi Arabia is hoping and arranging for different areas of future which is more comprehensive, expansive, sustainable and combined on both social and economic sector. All of these examples will be improved via Saudis experience financing, assessing to establish a nation of constant development. A massive amount of money has been spent by kingdom of Saudi Arabia to add value proposition to global business. The government of Saudi has planned goals of varies faceted reform strategy that lead Saudi Arabia to be one of the suitable position in the global to operate business. (http://www.sagia.gov.sa) At  the  same  time, Saudi Arabia is spending tens of billions of dollars to start four economic towns in diverse place of the nation to support economic improvement. 9.3The supplier environment Mobily attempts often to depend on several suppliers. Mobliy and its suppliers, both parties depend on the other for their successful commercial. Even though, both parties are looking for security and stability from their relationship, still they are some reasons to the supplier environment are subject to change, such as some disputes on a sudden raise in material or maintenance agreements prices which controls by suppliers to increase their prices and this will effect seriously on the company commercial operations. 9.4 The distributive environment Mobilys management is placed on marketing intermediaries as agents and distributors to make sure that their products arrive at the final consumer. To Mobilys management, it may seem that the conservative method of distribution in telecommunication is relatively static. For the reason that changes in the distributive environment happen quietly, and there is a risk of marketing companies failing to aware about the commercial change. 9.5 The competitive environment. The company must be aware about the potential risk of other players marketing similar and substitute services whether they are of domestic or foreign origin. . In the telecommunication sector in KSA have just three players a potential competitive threat. Whatever the type, size and composition of the telecommunication sector, Mobilys marketing management has a full understanding of competitive forces. However, Mobily Known with this knowledge, which will have a greater opportunity to compete effectively. http://www.da-group.co.uk/index.php?option=com_contentview=articleid=31:micro-and-macro-environmentscatid=2:marketing-lecturesItemid=3 The marketing mix Price Mobily used some approaches to price a product as the price charged for products and services is set unnaturally down in consideration of gain market share. Once this is attained, the price is increased. In addition, charge a reasonable price when has a strong competitive advantage. On the same time, Mobily attentive about competitors. However, most of their prices it is fair and satisfied for most of the customers. Place Channel Distribution Mobilys distribution strategy is driven by three main channels which: Direct sales: The direct sale channel includes Mobilys 24 flagship stores and 155 fully branded stores. The flagship stores are completely owned and employed entirely with Mobily personnel, while the fully branded outlets manage as franchises. Indirect sales: The Firm depend deeply on its distribution partners to attain wide range distribution at a rapid pace. Mobily has a sign primary distribution contract with seven major distributors, each of which special effects sales through 149 fully branded, 288 co-branded and 4,000 secondary distributor outlets. Co-branded: The Company has channelled sales through ATM and the Internet for top-up of prepaid cards. So as to focus VIP sector successfully, the Company has begun a separate section of Corporate and VIP Sales. Product Mobily has been achieving the three levels of product which are the Core product, the Actual product, and finally the augmented product. In addition, another marketing tool for evaluating products as The Product Life Cycle (PLC) which based upon the biological life cycle, and The Customer Life Cycle (CLC) which focuses upon the production of and delivery of lifetime value to the consumers.( http://marketingteacher.com) Three Levels of a Product Mobily Connect: Connect Al Zaeem, Connect Turbo Router, Connect Turbo, Connect Mini WIFI, Ferrari Connect, Connect Foot Ball, Connect Long Tail, Mini Wi-Fi. Postpaid : Mobily Minute buntes , Blue Wave Mada, Najma,Deeraty, Raqi, Fallah Mobily Khatty and Khatty Plus. Prepaid: 7ala, Anees, 7ala Plus, Wafeer, Mabuhay Kababayan, Blue Wave, Visitors Line Rihal, fallah, I phone line. Smart phones :I phone 3Gs, Iphone 4 , BlackBerry,Nokia N8,Samaung Galaxy Tab, Liquid E Ferrari . Broadband at home, Mobile internet, Internet Roaming(can only be used outside the kingdom of Saudi Arabia). (http://www.mobily.com.sa) Promotion Mobily is using the promotions mix to deliver a unique campaign as : Personal Selling. (Mobily tend to be well trainee for their sales workers in the approaches and techniques of personal selling to meet high margin in sales). Sales Promotion. Public Relations. Direct Mail. Trade Fairs and Exhibitions. Advertising.( Mobily paid for communication to develop attitudes and create awareness for people. Furthermore, Mobily use the advertising in media such as newspapers (local, free, trade), magazines and journals, television (local, national, satellite), outdoor advertising (such as posters). Sponsorship (Mobily bought for SR 200 million over the five years to associate their brand with Al-Hilal which   is one the leading and well-known football clubs, not only in Saudi Arabia but in the Middle East and Asia).( http://saudijeans.org) SWOT Analysis Strengths The improvement and concentrate on innovative products and value-added services. The experiences shift and indirectly supported from the mother company Etisalat UAE. Mobily have been using an aggressive marketing strategy that enabled it to obtain a 30% market share in less than two years of operation. To decline the cost of operation and improve data revenues flow, Mobily is improving a new Saudi fibre optic network. Mobily has been improving the company brand and reputation, to attract the corporate sector in KSA. Saudi government avoids currency risks. quickly responded to a new competitor Zain by creating roaming agreements with about 100 operators in 56 countries. Well improved mobile network coverage with 3G services. Weaknesses low in the increasing postpaid customers in Mobilys subscribers Continuing need for high spending for improve the network servers. High focus of prepaid subscribers, about 90% of customers signalling lower average revenue for parson. STC is ranked first in broadband overall Opportunities Due to rising oil prices in the world lead to build a strong economy and high GDP per person in a region. A strong population growth, 69% of the population is under the age of 30. Partnership with parent operator for entering new telecom markets. Increase market share in mobile broadband. Saudi government attempts to capture foreign direct investment in the telecommunications business through improvements in information technology sectors. Purchase of companies in the value chain. Threats Intense competition due to the entrance of MTC lately, as the third mobile player, is leading to decreases in average revenue. Due to easier for customers to transfer from one operator to another that lead to increased competition between operators. Low demand response to new services. Decline in margins as a result of price wars. Failure of public to adapt to changing technology.