In this report the company chosen is Etisalat. Etisalat is a telecommunication service company. The country of choice for expansion is UK. In this report we aim to analyze the impact of expanding a company like Etisalat in a market like UK. The important factors that will be taken into consideration is the extremely diverse nature of both the host and home countries because of which the market entry strategy needs to be very well thought of. The report also explains the 4P’s of marketing and their alignment in the process.
Etisalat is a UAE based company which is a telecommunication service provider. Etisalat operates in around 16 countries which includes countries in the middle east south Asia and Africa region. Etisalat takes pride in being the first telecom service provider in the UAE. It has varying products and service today ranging from mobile phones and tablets to their accessories to routers and home internet solutions and has started with some new home solution technologies that provide complete packages to the consumer. It also provides mobile plans and internet plans to the customers. Etisalat is also one of the key players that provides these telecommunication to other internet and data service companies.
1. Strengths and Weaknesses:
Etisalat is one of those companies that have a strong foothold in the international market. The reason for this success is the core competencies of the company which they achieved over time. One of the key strengths of the company is its highly skilled workforce. Etisalat takes active part in training its workers so that they are equipped in dealing with the technicalities as well as with the customers. Another strength of the company is that as of today it is ranked at the 140TH position according the report of financial times in terms of the growth in terms of market capitalization in the top 500 companies. There exists fierce competition in this industry major reasons for is the nature of profitability in the business. There are stable profits in this business. Relatively lower risks and higher return have lured in many competitors not just in the home country but also in the host countries where the company operates in. The four major competitors of the brand and are Vodafone, Three Mobile, Telenor and AT&T and Etisalat being one of the founders as a company do have an edge, but they constantly need to innovate to maintain their legacy. The weaknesses of the UAE market can be its high dependency on providing job opportunities to only UAE nationals as they call the Emirati people as a result of which a lot of South Asian particularly Indians possessing IT skills lag behind which can actually prove to be beneficial for the company. (Current Strengths And Weaknesses Of The UAE Economy, 2016)
2. Home Market
Etisalat has its official headquarters in Abu Dhabi, UAE is known to be one of the most advanced markets in the middle east they have proved to become one of the many leaders in technological innovations. Also, UAE’s telecom penetration is seen to be one of the highest in the world. The UAE government also has policies that support the overall growth of the telecom sector in the market hence originating from the home market was nothing but fruitful for the company.
The United Arab Emirates is in the middle east, north west-Asia. It borders the Gulf of Oman and the Persian Gulf. It is located on the Arabian Peninsula. The central positioning of the country plays a huge part in the geography. Its geographical location is of core importance due to the close connection with the South-Asian countries as well as the middle east countries. It has a climate that attracts tourists from all over the world due to its tropical nature. However, the climate of the UAE is a lot hotter than even the South-Asian countries. However, the central positioning of the country aids in the strategic importance where business in the region is concerned.
In comparison to the size of the federation and the kind of wealth that it possesses UAE has a relatively smaller population. The UAE is a very diverse society where people come from different backgrounds nd countries. It can be safely termed as a multiethnic society. According a recent report published it is seen that only 20% of the total population in UAE are Emirati’s rest are all immigrants from South Asia, Middle-East etc (Abdul Rahman) .
The current political state of the UAE is that it is a member of the Gulf Cooperation Countries. Being a member of the GCC countries mean that their political and economic ties are aligned. Apart from UAE the other members of the GCC are Oman, Qatar, Kuwait and Saudi Arabia. One of the key issues for the federation in the political front is the problem with Iran over the three islands that it claims to be theirs. Another problem that currently exists in the country especially for the telecom sector is the relaxation from the governments and policies that benefit the new players in the market as a result of which the barriers to entry in an industry like this has reduced significantly. The legal system in the UAE is also constantly evolving and changing to keep up with the pace of the businesses that are happening in the environment as of today, specifically in the business environment. The law is a mix of the shariah law, criminal law and the civil law (Business).
The official language of UAE is Arabic, and the spoken form language is also Arabic in all over middle east and even beyond. However, a modern scripture of Arab is used in the written communications. Arabic being the sole language brings about consistency in the communication across middle east. However, the Arabic dialect is extremely diverse across all the countries throughout the MENA region the kind of Arabi spoken in Dubai is significantly different to the kind spoken in Morocco.
Almost the entire population of the UAE are Muslims, majority of them being Sunni Muslims a very small part of the population about 4-5% are Hindus or Christians (Ethnicity, Language, & Religion of the United Arab Emirates, 2014).
The household expenditure on average for an UAE citizen is about AED11,241.20 a month. (Bundhun) whereas the average monthly income for a household in the UAE AED36,438.10. This amounts to be a sufficient income level in most of the scenarios.
Technology is transforming significantly the ways of doing business in the UAE. The government is investing in Technology and the city of Dubai has become a smart city where technology is concerned. The government saved up to almost 1.17bn dollars due to these shared smart services a technological environment like UAE makes it easier for a telecom company like Etisalat to operate in. (Trenwith, 2016)
3. Host Market:
The host market that we are expanding into is the UK. The United Kingdom comprises of countries like England, Scotland Wales and Northern Ireland. It is said to be the one of the originating regions of the industrial revolutions. The UAE government has policies that support initiation of businesses the details of which will be discussed below (United Kingdom Country Profile, 2018).
The United Kingdom as mentioned above comprises of the Northern Ireland, England, Wales and Scotland and is situated on the British Isles. Two major Islands which are the Great Britain and the Ireland are the constituents of the area. England occupies the majority of the landscape in the whole region. The country also enjoys a climate that has its fair share of summers and winters. (Geographical Position of United Kingdom)
The social organization of the UK is one of the most diverse countries with influences from Europe and central Europe as well as some parts of Asia. However, we have over the years seen a prominent class structure in the UK with utmost priority given in a hierarchal manner. In the British culture it is seen that the idea of class supersedes the idea of their culture and ethnicity but with radical shifts being observed in that of the demographic and economic structure the class dynamics are going down with time.
A constitutional monarchy is what the UK is. The monarch of the country is the head of the state and the Prime minister exercises its rule as the head of the government. In the earlier days the monarch had sufficient authority in the matters of the government but with the times changing significantly over the years the authority of the monarch has reduced to being ceremonial in most of its matters. The Prime minister has the majority power in the matters of the state (Culture of United Kingdom).
There are some people present in the UK as we talked earlier belonging to diverse backgrounds that speak their native language but predominantly there is only one official language spoken and written by the people of the UK which is English. There are other languages such as Welsh and Irish as well which are officially recognized but very few people speak these languages and when there are official scenarios being taken place the language spoken is only English.
The UK as a union has no particular religion put predominately we can see a strong foot hold of the Christian community in the union and Christianity is surfaced to the main religions of the United Kingdom. (Ethinicity language and religion of the United Kingdom, 2014)
The income level in the UK is averaged to be around £27,300 in the fiscal year of 2017 according to the Office of National Statistics report that was published. Growth in the overall disposable income has been slow over the years for quite a while now but is amounting to be substantial and is proving to pick up pace now. This rise in the income level also supports expenditure hence makes doing business better. (Office for national statistics)
4. Market Attractiveness for international market:
Investment in the UK can be extremely fruitful as it has one of the most favorable conditions for doing business. UK has the best labor force and human resource tool when it comes to technical skills, apart form that the financial skills of its human resource is also unparalled. The business development skills that the workforce possess is also proved to be very useful for businesses that enter the country from different markets that have little or no information about the UK market. The UK ranked on the number 7TH when it came to the ease of doing business in the world. (Why Invest in UK?, 2013)
As mentioned above the labor and skills in the UK are unmatchable. Apart from this fact the ease of setting up a business in the UK is another important factor. It takes less than even 24 hours to get your company registered in the UK. Apart from this the government provides great support to companies involved in R&D in the UK and for a company like Etisalat this can be of a huge advantage. As observed in the UAE and while also being in the telecom sector the company needs to invest significantly in the telecom sector and for this the company needs to continuously innovate and invest in technology for this purpose the company needs to also invest in research and development. The government of the UK helps companies invest in research and development by granting them loans and by also providing them with subsidies.
Another important element that will make a market like UK all the more attractive for a company like Etisalat is the abundance of research and data that has already been done on the British customers. This research can provide the consumers with significant insights on how to tap into the customer mind (Why Invest in UK?, 2013)
5. Market Entry Mode:
The most appropriate market entry strategy for Etisalat will be Intermediate market entry mode for this purpose we have chosen Franchising. The reason for choosing the franchising strategy is because of the strengths of the UK market mentioned above. One of the key strengths of the UK market are its workforce that are equipped with strong technological workforce. However, to ensure that appropriate services are being delivered to the end consumer the top hierarchy from Etisalat can visit UK and train the workforce again utilizing their core competencies which are training and development. Franchising will be better than the rest of the modes of entry including contracted production or join ventures because in franchising the ownership of the brand will remain with the company and they will be employing people there this way they can make sure that the services being offered in another country is up to the mark and aligned with their standards (Etisalat : International Market Entry Strategies, 2016) The market entry modes can be categorized into three groups the first mode refers to when the product is manufactured in the home country itself and then transferred to the host country then comes the second mode in which the product is manufactures in the host country however here we use the third mode which is the franchising mode of the business. (Morschett, 2011)
6. Marketing Mix
The product that Etisalat will be offering will be extremely similar to what it is offering in the middle eastern markets as well as the South Asian markets we will have the entire range of home solutions that would involve router and Wi-Fi services in home as well as mobile packages both pre-paid and postpaid. We will also include our mobiles and accessories and the entire range of products will be launched at once and will be introduced in our 360-degree marketing plot which is further explained in the promotions bit below. The core product in this scenario will be the Wi-fi service that the company provides the augmented product will be the router that they are supposed to buy to avail the service and the augmented product is the customer service that the company provides.
The pricing strategy needs to be very well thought of when entering a market like the UK. We need to cover our costs that were incurred in the expansion but then we also need to cover ground in the new market. For this purpose, we will have a two tier pricing strategy. In the beginning in order to make the presence of the company felt in the new market we will have a low-price package and will be following a low price strategy so that we get the attention of the customer once that is done we will go for a rigorous model.
The promotion strategy we will employ in the UK will be to run a 360-degree marketing campaign. The marketing campaign would involve Etisalat ads as well as conducting BTL activities in the malls. The brands logo will remain the same as it is the signature of the brand essence however the tagline should be adjusted for people to understand it better the tagline used should be of “reach” which the company is using in other markets and should have the same brand message.
In a service like this we do not go for distributors and wholesaler channels, franchising is the only apt we use and there are no other partners involved in the process. The place that will be chosen ton open up the Etisalat franchise will be near big malls, airports and busy famous streets especially in cities like London n the reason why we choose these particular are is because these are the areas highly visited by tourists who will be needing sims and we will tap into the market through these tourists.
The conclusion that we draw from the entire report shows us that we UK is a lucrative market to expand into and the government policies rules and regulations have made it easier for international companies to do business in the UK. Because of which it will be easier for Etisalat to do business in the United Kingdom. It will also help the company make a strong foothold in market other than the middle east.