Companies in GCC - Research Paper Example

Companies in GCC Contents Contents 1 Executive Summary 2 Introduction 2 Body of the subject 4 Organizational structure of Etisalat 4 Management Problem 5 Conclusion 6 Recommendations 6 References 8 Executive Summary Etisalat is a telecommunications service provider which is in existence since 1976. This report discusses about the organizational structure and management issues of Etisalat. It is found that Etisalat group has hierarchical organizational structure which needs to be more flat to accommodate the changing business scenario. Etisalat has many management issues and they have reshuffled their management team many a times. This report discusses about the problems and the recommendations for the problems faced by Etisalat group. Introduction Etisalat is been one of the telecommunications service providers since 1976 in the UAE, and down the years has built up a modern infrastructure of telecom and has developed itself as a reliable and innovative service provider in the country. Over the last 40 years Etisalat has grown up to become one of the world’s leading telecom service providers. In 1989 it became the first service providing company in the country to build its Outside Plant Network using GIS technology. Etisalat’s became the second mobile license holder, and received the first 3G license in Saudi Arabia. Its subscribers have increased in huge numbers from 4 million in 2004 to over 139 million at the end of 2012. More than two thirds of the planet’s surface Etisalat has its network coverage service. The organization structure in Etisalat is basically an autonomous unit in which Etisalat UAE which are United Arab Emirates and Etisalat Services Unit, this is for this is for providing Licensed Telecom Services in the United Arab Emirates and Etisalat Services Unit, this is a wholly owned holding company for providing certain non-telecom services to the Corporation and also to the third parties. Both the units do their respective operations and report to the Board of directors present in different countries (Flanagan, 2012). Body of the subject Organizational structure of Etisalat (Source: Etisalat, 2013) The organizational structure of Etisalat is multilevel in nature. On the first level Etisalat has senior management members like Ahmad Abdulkarim Julfar, CEO of Etisalat Group, Eissa Mohamed Al Suwaidi, Chairman of Etisalat Group, Khalaf Bin Ahmed Al Otaiba, Vice Chairman of Etisalat Group and 8 other directors. They look after the whole Etisalat group. The next level has other senior management members like CFO, CIO, Chief Internal Auditor, Chief Legal and Regulatory Officers etc (Baligh, 2006). They are specialist who is looks after individual department. Thus the organizational structure of Etisalat Group is hierarchical in nature. Here the specialist officers like CFO, CIO etc. has to report to their senior authority that is CEO. Thus the members mainly communicate to their immediate superiors and to their immediate subordinates. This helps reduce the communication overhead by limiting information flow (Etisalat, 2014). Management Problem Etisalat was faced with many management problems in recent years. In 2011, the management team of Etisalat underwent major restructuring including change of company’s chairman Mohammed Omran. During that time Etisalat promoted one of the existing directors to the role of chairman. Again in 2012, Etisalat appointed Ahmed Al Awadi as the chief financial officer for in UAE operations in its management reshuffle. The appointment marks the latest management reshuffle at Etisalat. The reshuffle came after many setbacks for Etisalat like intense competition which they face in UAE, failure to acquire rival operator Zain and its exit from India market. The issues resulted in several consecutive decline of profit. Etisalat entered into many new markets and hence went into expansion mode in Africa and Asia to the point that it has now operations in 18 countries. It invested mainly in Sri Lanka, Pakistan, West Africa and Indonesia. But still after the expansion, they were facing with declining numbers. In 2010 the profits and revenue of the company declined along with increased competition from Du. In spite of major strides which the group has made in recent years the stiff competition which they faced in UAE has resulted them in losing ground to Du Company. While Du in the second quarter of earnings of 2011 acquired 171,000 new customers, Etisalat lost many customers. The profit of the company has declined from AED 7,428,778,000 in 2010 to AED 4,610,148,000 in 2011. During 2011, their earnings were significantly impacted as their 122 licenses got cancelled by Supreme Court of India. Because of license cancellation there mobile subscribers declined. Conclusion Thus from this study it is seen that such a huge company like Etisalat has a multiple level in its organization structure based on various departments and also in various countries. It is seen in the organization structure that the company has spread itself in wide locations across the globe and manages it by having various heads for various countries which enables the company to get information from all the parts and all the business departments in which the company has spread. Looking at the management issue of the company it is seen that the company has incurred loss because of the vast expansion it has done throughout the world. Recommendations Looking at this report over company’s organization structure it can be recommended to the company that instead of having a multilevel; organization structure the company can look forward in implementing a flat structure in the organization for its entire group and its overall business. Flat structure helps to reduce the number of levels in the management as a result of which the company has only a single level which will help Etisalat in better communication among the various levels of managers and create more unity among all is employees. Flat structure will help the company managers to make decisions properly and those decisions can be implemented very easily at various levels without getting any restrictions to the change. This will also help the company to have more of skilled employees and also help to grow the skills of the labors (Baldwin, 2011). For the management issue the company can be recommended that the reason for the huge loss in the profit margin year 2011 is mainly is because of the less market research of the company about the e market present in the concern country where the expansion is been done as result the company to overcome this problem must undergo a thorough research of the market position of the particular country based on the customers requirement (Hill and Jones, 2008). Etisalat faced rift with Pakistan because of management issues with Pakistan. The government of Pakistan made a deal with Etisalat to sell 26 percent stake with the management rights in Pakistan Telecommunications Company Ltd. But the management of Etisalat missed two deadlines to pay their outstanding dues to the Pakistan government (John, 2005). References Baldwin, D. 2011. Etisalat silent on management shake-up. Retrieved from: http://gulfnews.com/business/telecoms/etisalat-silent-on-management-shake-up-1.849532. Baligh, H. 2006. Organization Structures: Theory and Design, Analysis and Prescription. New York: Springer. Etisalat, 2012. Annual Report. Retrieved From: http://www.etisalat.com/en/system/docs/reports/Etisalat-2012-En.pdf. Etisalat, 2014. About US. Retrieved From: http://www.etisalat.ae/en/aboutus/about.jsp. Flanagan, B. 2012. Etisalat appoints CFO in latest management reshuffle. Retrieved from: http://www.thenational.ae/blogs/plugged-in/etisalat-appoints-cfo-in-latest-management-reshuffle. Hill, C and Jones, G. 2008. Essentials of Strategic Management. America: Cengage Learning John, I. 2005. Pakistan says rift is because of Etisalat’s management issues. Retrieved from: http://www.khaleejtimes.com/DisplayArticle.asp?xfile=data/business/2005/December/business_December25.xml§ion=business. Read More