Strategies of Ooredoo - Case Study Example

Strategic Plan Student Names Student IDs Table of Contents 1. Executive Summary 3 2. Introduction 3 3. Analysis 5 3.1 External Environmental Analysis 5 3.1.1 PESTLE Analysis 5 3.1.2 Industry Environment - Porters Five Forces 8 3.2 Internal Analysis 10 3.2.1 Ooredoo Vision, Mission and Goal/Objectives 10 3.2.2 Resources 10 3.2.3 Financial Analysis 11 3.3 SWOT Analysis 14 3.4 Competitive and Corporate Strategy Analysis 14 4. Options for the Company’s Strategic Plan 15 5. Recommendation 15 6. Implementation or Action Plan 15 7. Evaluation 16 References 16 Appendix 17 1. Executive Summary Ooredoo is a telecommunication provider that has grown its acquisitions in Kuwait, Maldives, Oman, Palestinian territories and Tunisia. The country is stable in political and in economic terms. The dependency ratio is low and 70% of the population is of adults, there is a high demand and usage of the technology of IT and communication. The only areas where Ooredoo lacks are their weak customer care services and expensive packages. In the Five Forces of Porters, the external threats to Ooredoo are weak, because Ooredoo is currently a leading brand with high network coverage in Qatar. The mission and vision statements of the company are related to each other, but they do not discuss anything related to their employees. In financial analysis, five ratios, i.e. current ratio, total debit ratio, debit equity ratio, expense/sales and asset turnover ratio are used to analyze the company on the monetary basis. SWOT analysis are derived with the help of internal and external analysis. Resources and competitive strategies of the company are also discussed in this strategic plan. There are two recommended plans made in this strategy with the help of several analyses. One of them is strongly suggested to include in the future plans of the company. The suggested plan is divided into a number of steps with the time duration in which they can be completed. Hence, Ooredoo is performing well in the industry, it has a strong repute, brand image and brand identity and if it follows the recommended action plan, it can increase its quality services and customer base in return. 2. Introduction Ooredoo is a telecommunication provider that has grown its acquisitions in Kuwait, Maldives, Oman, Palestinian territories and Tunisia. It offers four different types of services to the customers, those are wireless services, content services, wire-line services and mobile services. It has a market share in the telecommunication sectors of domestic and international markets and in the business and residential markets as well. In the year 2008, the company established Qtal International. In the next year, an ownership was purchased by the company in Indosat. The biggest achievement of Ooredoo in the year 2011 was its brands were listed on the Muscat Stock Exchange and Palestine Exchange. During the following year, the Qtel group purchased more stake ownership and those were in Wataniya, Tunisiana and Asiacell. In the year 2014, the company launched its 3G services in Myanmar. The latest achievement secured by the Ooredoo is reaching to the milestone of having 100 million customers[Oor15]. Below is the graph that shows the company performance from the year 2006 to 2015: Figure 1: Company Performance of Ooredoo[Qat15] The share price of Ooredoo in the year 2006 was QR 210 and this price increased till the year 2008 and was recorded at QR 287. In the middle of the year 2008, the share price started to decline and reached at the point of QR 99 in the beginning of 2009. From 2009, the company started to perform better and increased its market share to QR 182 in the first quarter of 2011. Again, the price experienced to face a declining and was marked on the price of QR 144 at the end of the year 2011. In the beginning of the 2012, the company tried to progress, but faced the downturn till the end of the year. Throughout the year 2013, the company confronted a slow and gradual upturn and it was till the middle of the year 2014. Since then, the company has faced downfall in its share price and now it is at QR 78.9. This shows an unstable position of the company in the market. The purpose of this report is to analyze the weaknesses of the company and to suggest the action plan to reduce those weaknesses. The strategic plan will assist the company in achieving its goals and objectives. 3. Analysis This section will analyze the firm internally and externally. It will also discuss the corporate competitive strategies. 3.1 External Environmental Analysis 3.1.1 PESTLE Analysis The PESTLE analysis of the Ooredoo is prepared as below: 3.1.1.1 Political The political situation of Qatar is stable and this situation affects the telecommunication industry to grow and expand. The government of Qatar has approached the policies, social responsibilities and the environmental issues of the Ooredoo by establishing ictQatar in the year 2004 that acts as a regulatory body and information and communication technology (ICT) policy of the nation. The impact of ictQatar is positive on the Ooredoo because it will control the activities of the company. Minor changes are expected from this organization in the form of clauses or rules to govern. Business Enablement Laws are designed by the ictQatar that covers the laws and practices related to tax policy, freedom of the press, trade restrictions, tariffs, labor law, environmental law and level of corruption and bureaucracy. Moreover, the government is trying to improve the access of the population to the health care services. Qatar has been ranked fourth in accessing of the internet in the schools. The government is improving its connectivity via starting a program that is about ICT infrastructure[ict]. 3.1.1.2 Economic The government has an influence on the IT and Telecommunication industry by planning to achieve the goal to be a knowledge based economy by the year 2030. The economy of Qatar is very well stable and the disposable income of customers is increasing due to several packages. The GDP per capita is more than $100,000 at PPP rate. The current interest rate that was reported by the Qatar Central Bank is 4.5%. The current exchange rate of USDQAR was traded at 3.64 QAR. The 1.2 % inflation rate was recorded in the August, 2015. The unemployment rate of Qatar is 0.2%. On 12th October 2015, the Qatar Stock Exchange has reached to the 11868.90 index points [Tra15]. These figures show improvement of the country as compared to the previous years. The impact of these figures is positive for the telecommunication industry to grow and expand. 3.1.1.3 Socio-Cultural There are high values for family privacy, separation of genders in public and hospitality. The division of labor is done on gender basis and there exist a relative status of men and women. People are more considerate on taking care of their children and their education as well. The people of Qatar are reserve and the citizens mostly belief in Islam and are Muslims[Qat151]. The views and beliefs of the society influenced the telecommunication industry by means of accessing to the internet for the knowledge purpose. More than 90% of the population are literate and ictQatar is trying to motivate the people to use the internet for several purposes, including knowledge. It was estimated in the year 2014 that Qatar has a population of 2,123,160. 70% of the people are in the age group of 25-54 years. The total dependency ratio is 17.1%. The average age of a person in Qatar is 32.6 years. 98% of the population lives in urban areas and Doha is the most populated city of Qatar. Arabic is the official language and about 77% of the people are Muslim. Arab, Pakistani, Iranian and Indians are the four major ethnic groups present in Qatar[Qat152]. Since the dependency ratio is low and 70% of the population is of adults, there is a high demand and usage of the technology of IT and communication. 3.1.1.4 Technology The technologies in electronics and communications equipment are updating with the passage of time and for that the industry is required to improve its connectivity and bandwidth as well. Ooredoo is the largest operator of the market and has reached within the country, even in the rural areas. 3G and 4G technologies were first offered of Ooredoo than the second operator of the market, i.e. Vodafone. The only areas where Ooredoo lacks are their weak customer care services and expensive packages. 3.1.1.5 Legal Security and legal restrictions are made by the government to ensure safety to the customers. The industry is now required to focus more in this area. The time duration in which there are legislative changes developed are usually a period of one year. The government organization, ictQatar prepares its annual report that covers such legislative changes, if there are any. Consumer and Digital Right Laws are created by the ictQatar to encourage the formation and practicality of the laws that relate to personal data of consumers, digital property rights, ensuring safe management, and securing the online transactions. Moreover, the employment law and employment opportunities are also created by ictQatar. 3.1.1.6 Environmental Hot and humid in summer and mild with rainfall in winter are the climates of Qatar. The weather is extremely hot from July to September, severely cold from December to March. The rainfall period creates problems in weak signals and connectivity. The national vision of Qatar is to encourage the use of those technologies that are sound and can raise awareness in public. Moreover, Green ICT Policy Instruments are formed to develop e-environment and e-waste policy and guidelines for the companies. 3.1.2 Industry Environment - Porters Five Forces The Five Forces Model of Porter for Ooredoo is discussed as below: 3.1.2.1 Industry Rivalry The telecommunication industry of Qatar is competitive and profitable as well. There are only two major competitors in the market: Ooredoo Qatar and Vodafone Qatar. Fixed broadband was recorded 0.275 million QAR, fixed line telephony was recorded at 0.455 million QAR and mobile phone services were recorded at 4.210 million QAR[Qat153]. The exit of the major companies are not worth doing, because they have penetrated into the market. The informational complexity of clauses and policies are moderate in this industry. The major competitors are offering similar features. The brand identity of Ooredoo is more than Vodafone. 3.1.2.2 The Bargaining Power of Customers/Buyers The buyers have lesser power to lower down the prices or to demand for high quality products from this industry. Vodafone is operating in some of the cities of Qatar, while Ooredoo is working in the whole country. The customers have no other choice than to use these two mobile companies. 3.1.2.3 The Bargaining Power of Suppliers The power of suppliers in this industry is moderate and it seldom can affect the prices of the products. The material required by the mobile companies is not in a bulk quantity. Mostly, the business works with fibers, cables and signals. 3.1.2.4 Threat of New Entrants The threat of new entrants is also weak to the companies in this industry. Vodafone entered into the Qatar market in the year 2009 and still it has not received the profits that Ooredoo is earning. Brand identity and capital requirements are very high to enter into this market. The coverage of the different parts of the country matter a lot. 3.1.2.5 Threat of Substitute Products or Services Vodafone has a coverage to Doha, Wukhair, Al Khor, Umm Slal, Saylia and Shahaniyah, while Ooredoo has reached to almost every part of the country. So, the buyers can have substitutes of Vodafone in some of the cities, otherwise they have to opt for Ooredoo. 3.2 Internal Analysis The internal analysis is composed of the mission, vision and goals of the company, resources and financial analysis. 3.2.1 Ooredoo Vision, Mission and Goal/Objectives The mission of the Ooredoo is to offer such phone services that are easy to use and to keep the consumers up to date with the best packages. The vision of the company is to fulfill the dreams and aspirations of the customers by enriching their lives. The goal of the company is to support the Qatar National Vision 2030, which states to make Qatar as one of the best linked and connected countries of the world[Oor151]. The mission and vision statement do not define the customers very well and it did not identify the market as well. It has emphasized more on its services and its quality. The economic objective of this company is to support the national vision, which is about developing the knowledge based economy. The company has a competitive strength of its coverage that will aid a lot in reaching the goal. The company is highly concerned about the Corporate Social Responsibility. Their mission and vision statements do not revolve around the importance of their employees, but the company has stated about its employees and their importance in its news and events section on the website. 3.2.2 Resources The company is achieving a competitive advantage by using its financial resources in signing the Murabaha facilities, designing of apps and portals for its customers. Physical resources are used in the workplace and outdoors for the installation or repairing of towers. Human resources are used in the workplace and are more related to the management. The organizational resources are also used in the workplace and outdoors to effectively consume the assets of the company. Technological resources are used to develop and update the features and connectivity. The innovation resources are used by the company to develop the best packages for the customers. The reputation, a form of intangible resources, is used for the fundraising programs and to sponsor certain events in the country[Oor152]. 3.2.3 Financial Analysis The financial analysis from the year 2010 to 2015 is prepared as follows: Year Ratio 2010 2011 2012 2013 2014 Current Ratio 0.91 0.68 0.71 1.20 0.96 Total debit ratio 0.50 0.35 0.35 0.66 1.36 Debit Equity Ratio 1.03 0.55 0.54 1.99 3.21 Expense / sales 0.14 0.16 0.17 0.32 0.36 Asset turnover 0.64 0.51 0.50 0.34 0.49 Table 1: Financial Analysis of Ooredoo 3.2.3.1 Current Ratio Year 2010: The proportion of current assets to pay-off the current liabilities is 0.91. Year 2011: The proportion of current assets to pay-off the current liabilities is 0.68. Year 2012: The proportion of current assets to pay-off the current liabilities is 0.71. Year 2013: The proportion of current assets to pay-off the current liabilities is 1.20. It is the highest among all the five years. Year 2014: The proportion of current assets to pay-off the current liabilities is 0.96. 3.2.3.2 Total Debit Ratio Year 2010: The amount of leverage that is used by Ooredoo is 0.50. It shows moderate dependency and equity position as well. Year 2011: The amount of leverage that is used by Ooredoo is 0.35. There is less dependency on the leverage and the equity position is strong. Year 2012: The amount of leverage that is used by Ooredoo is 0.35. There is less dependency on the leverage and the equity position is strong. Year 2013: The amount of leverage that is used by Ooredoo is 0.66. The dependency on the leverage is high and the equity position is weak. Year 2014: The amount of leverage that is used by Ooredoo is 1.36. The dependency on the leverage is very high and the equity position is very weak. 3.2.3.3 Debit Equity Ratio Year 2010: The amount of leverage that is used by Ooredoo is 1.03. The dependency on the leverage is very high and the equity position is very weak. Year 2011: The amount of leverage that is used by Ooredoo is 0.55. The dependency on the leverage is high and the equity position is weak. Year 2012: The amount of leverage that is used by Ooredoo is 0.54. The dependency on the leverage is high and the equity position is weak. Year 2013: The amount of leverage that is used by Ooredoo is 1.99. The dependency on the leverage is very high and the equity position is very weak. Year 2014: The amount of leverage that is used by Ooredoo is 3.21. The dependency on the leverage is extremely high and the equity position is extremely weak. 3.2.3.4 Expense/ Sales Year 2010: The tendency of sales or revenue to cover the expenses is 0.14, which is acceptable. Year 2011: The tendency of sales or revenue to cover the expenses is 0.16, which is acceptable. Year 2012: The tendency of sales or revenue to cover the expenses is 0.17, which is satisfactory. Year 2013: The tendency of sales or revenue to cover the expenses is 0.32, which is good. Year 2014: The tendency of sales or revenue to cover the expenses is 0.36, which is reasonable. 3.2.3.5 Asset Turnover Year 2010: The ability of Ooredoo to generate revenue from the assets is 0.64 or 64% that shows a good performance of the company. Year 2011: The ability of Ooredoo to generate revenue from the assets is 0.51 or 51% that shows a satisfactory performance of the company. Year 2012: The ability of Ooredoo to generate revenue from the assets is 0.50 or 50% that shows a satisfactory performance of the company. Year 2013: The ability of Ooredoo to generate revenue from the assets is 0.34 or 34% that shows an adequate performance of the company. Year 2014: The ability of Ooredoo to generate revenue from the assets is 0.49 or 49% that shows a satisfactory performance of the company. 3.3 SWOT Analysis The SWOT analysis compiled from the internal and external analysis is designed as below: Strengths Weaknesses The leading brand. Highest coverage. Strong brand identity. Adequate allocation of tangible and intangible resources. Increasing current ratio from the past 5 years. Better performance of the company through its high asset turnover ratio. Customer care services are not up to the mark. Expensive packages. Weak signals in some areas. The importance of employees is not mentioned in the mission and vision statements. High dependency on leverage from the past 5 years. Weak equity position. Opportunities Threats Increasing birth rate as compared to death rate illustrates more population in future. Political and economic stability. Establishment of ictQatar. Knowledge based economy. High rate of literacy. 70% of the population’s age group are between 25-54 years. Changes in technologies. Competitors have started new marketing strategies. Table 2: SWOT Analysis of Ooredoo 3.4 Competitive and Corporate Strategy Analysis The company is pursuing the growth strategies and global strategies. The company has made its best to cover a number of geographic areas. The company has different business units such as Indosat, Qtel, Asiacell, Tunisiana, Nawras and Wataniya Telecom. These business units are operating in other geographic areas such as Indonesia, Asia, Tunisia and Oman. They exchange the resources and have synergy among them. Qtel and Indosat are having highest market share from all of them. The corporate strategy followed by the Ooredoo is Value Creating Strategy, in which the company is expanding and increasing its market share to gain competitive advantage. This is the strategy used from the year 2013 and has benefited the company by producing big profits. 4. Options for the Company’s Strategic Plan Even the company is expanding and increasing its market share, there are two points that are lacking in this course of action. The company must include these two points in their upcoming plans: Provide better quality customer services and reduce the delay in solving the problems that are faced by the customers on and off. This requires the management to notice the areas of the structure that are not completing the process in time. To improve the technology of the products and to provide quality signals with the highest coverage network. 5. Recommendation The second option is stronger to achieve the corporate strategy of the company, i.e. Value Creating Strategy. The rural areas and small cities face the problems of weak signals and it is damaging the image of the company. It may also lead to the decline of customer base. The latest products with few or zero signal problems can maintain the repute and image of the company. 6. Implementation or Action Plan Jan to Mar Apr to Jun Jul to Sep Oct to Dec 1. The analysis of the products. 2. Survey from the customers about the products. 3. Collection of data. 4. Analysis of data. 5. Technological search for the problematic products. 6. Calculation of the required resources. 7. Improvement in the products Table 3: Action Plan for Ooredoo Step one is a short term process. From step two to three, the process is medium term and from step four to seven, the process is long-term. It may take more time from the expected one. 7. Evaluation The recommended strategic plan is beneficial for the company in pursuing its corporate strategies and the vision of ictQatar 2030. The success factors for this plan is the capital requirements and technological resources that a company has in abundant quantity. References 1. Budde. (2015, October 14). Qatar-Telecom, Broadband and Mobile. Retrieved from Budde: http://www.budde.com.au/Research/Qatar-Telecoms-Mobile-and-Broadband.html?r=51 2. Economics, T. (2015, October 13). QSE. Retrieved from Trade Economics: http://www.tradingeconomics.com/qatar/stock-market 3. Factbook. (2015, October 14). Qatar Demographics Profile 2014. Retrieved from Index Mundi: http://www.indexmundi.com/qatar/demographics_profile.html 4. ictQatar. (2015, October 13). Transforming the State of Qatar toward a knowledge base economy. Retrieved from mdps: http://www.mdps.gov.qa/portal/page/portal/gsdp_en/media_center/news_listing/manage_missilanous_files/ictQATAR.pdf 5. Ooredoo. (2015, October 14). Milestones. Retrieved from Ooredoo: http://www.ooredoo.qa/en/milestones 6. Ooredoo. (2015, October 14). Vision. Retrieved from Ooredoo: http://www.ooredoo.qa/en/ABOUT_US_HOME_DP 7. Ooredoo. (2015, October 12). Who We Are. Retrieved from Ooredoo: http://www.ooredoo.com/en/who_we_are 8. Qatar. (2015, October 14). Retrieved from Every Culture: http://www.everyculture.com/No-Sa/Qatar.html 9. Qatar-Stock-Exchange. (2015, October 12). Company Performance. Retrieved from Qatar Stock Exchange: http://www.qe.com.qa/pps/qe/QE%20English%20Portal/Pages/Company%20Profile%20Pages/QE%20Company%20Profile?CompanyCode=ORDS Oor15: , (Ooredoo, 2015), Qat15: , (Qatar-Stock-Exchange, 2015), ict: , (ictQatar, 2015), Tra15: , (Economics, 2015), Qat151: , (Qatar, 2015), Qat152: , (Factbook, 2015), Qat153: , (Budde, 2015), Oor151: , (Ooredoo, Vision, 2015), Oor152: , (Ooredoo, Milestones, 2015), Appendix 3.2.3.1 Current Ratio= Year 2010: = 0.91 Year 2011: = 0.68 Year 2012: = 0.71 Year 2013: = 1.20 Year 2014: = 0.96 3.2.3.2 Total Debit Ratio = Year 2010: = 0.50 Year 2011: = 0.35 Year 2012: = 0.35 Year 2013: = 0.66 Year 2014: =1.36 3.2.3.3 Debit Equity Ratio = Year 2010: = 1.03 Year 2011: = 0.55 Year 2012: = 0.54 Year 2013: = 1.99 Year 2014: = 3.21 3.2.3.4 Expense/ Sales Year 2010: = 0.14 Year 2011: = 0.16 Year 2012: = 0.17 Year 2013: = 0.32 Year 2014: = 0.36 3.2.3.5 Asset Turnover = Year 2010: = 0.64 Year 2011: = 0.51 Year 2012: = 0.50 Year 2013: = 0.34 Year 2014: = 0.49 Read More