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STC problems in Internationalization


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STC problems in Internationalization

Saudi Telecom Company (STC)
The Saudi Telecommunication Company is a communication group that is dedicated in providing adequate communication links for over one hundred and forty two millions subscribes in over sixteen nations in Asia, Africa and Europe (Mkisi, 2008, p. 111). The organization is the largest telecommunication organization by market in the entire communication industry. In the past few years, the Saudi Telecommunication only provided communication links in the surrounding nations. However, after making enormous profits, the nation has been capable of supply communications networks to other places. The international supply of the network links is what made the organization to acquire gains that are more profitable after the introduction of the communication links to other nations.

The Saudi Telecommunication organization provides diverse services to the member states especially communication services. The mission of the Saudi Telecommunication group is to ensure that the member’s nations receive adequate communication links. There is need for the firm to provide good networks that facilitate the communication between the organizations. The organization is aimed at ensuring that the member’s states are capable of providing enough communication links to the entire world (Salibi, 2008, p. 94)

Although the Saudi Telecommunication group has faced several challenges, it is vital to note the success of the communication firm. Just like any other organization, the Saudi Telecommunication firm has ensured that it provides quality and unique services to the customers. The number of the offices and sub-branches created in the entire world is an indication that the organization is on the progress. In the current statistics, it is evident that the organization has provided adequate communication links between the member’s states.

The services provided by the Saudi Telecommunication to the member state are unique from the services received from other nations. Although there are others emerging communication organization, the Saudi Telecommunication company is capable to outshine the other industries in providing adequate competition. In the major member states of the Saudi Telecommunication group, the communication services divided into three major categories. The differentiation of the services has made it easier for the firm to identify the most appealing nations that are readily available in usage of the services (Salibi, 2008, p. 100).
Fig. 1 illustrating increase in subscribers using the Saudi Telecommunication Company (STC)
According to the graph, since the year 2004 to 2007, an increase in the subscribers using the Saudi Telecommunication Company has been denoted. Since the organization enlarged to the international level, the total number of users of the communication network has also increased. In years 2004, the total percentage of the subscribers that used the Saudi Telecommunication services for the purpose of communication was 23% (Mkisi, 2008, p. 102). However, the number has been slowly but gradually improving yearly until finally achieving forty-seven percent in the year 2007. The increase in the number of the subscribers is the key contributor to the profits that the organization makes. The expansion of the Saudi Telecommunication company to the international levels such as Europe and Asia makes the organization to become even more competitive.

The three categories of the network links provided to the customers encompass of the Jawal network, Hatif network and internet services. The Jawal network majorly deals with the providing of the mobile networks. In most nations today, there is the upgrade of the local citizens from the use of the landline network to the usage of the mobile phones. The use of the mobile cell phones has made it possible for the Saudi Telecommunication company to achieve its goals. The introduction of the cell phones in the African nation contributed to the success of the Saudi Telecommunication group. Although there are other mobile communication services, the strength of the installed network provided by the Saudi Telecommunication group makes the organization preferred than the other organizations. The Jawal mobile network well established in the six nations especially in the Middle East nations. In nations such as Nigeria, Sudan and Egypt, the Jawal network services are the best mobile services commonly used by most of the local citizens (Salibi, 2008, p. 127)

Initially, the Hatif, which is the landline networks service provided by the Saudi Telecommunication company was the best service that was well established in most of the member states. This was before the introduction of the mobile phones, which brought subs equate changes in the communication industry. However, in the current world, the Hatif network is still in some of the nations such as Egypt, Kuwait and Iraq in the major offices (IT News Africa, 2012). Most of the organizations that still require the landline networks services especially to make the office calls and inquire from the employees about the progress of the firm in general.

The third service that is provided by the Saudi Telecommunication group is the internet services. The internet service is the latest services introduced by the Saudi Telecommunication company to satisfy the needs of the customers. The introduction of the internet service is what brought change to the entire organization. Since most of the people in the current world use internet for purposes of communication, the Saudi Telecommunication group ensured that the internet is connected to the member states (Mkisi, 2008, p. 116). The use of the internet by the customers is one of the key progresses that are achieved by the Saudi Telecommunication organization in providing services to the entire world.  
The challenges that Saudi Telecommunication Company (STC) faced when entering the 6 countries Egypt, Yemen, Pakistan, Sudan, Nigeria, Tunis

The Saudi Telecommunication company faces diverse challenges while ensuring that the member states acquire the expected communication services. The challenges make it almost impossible for the organization to achieve it goals and expectations in providing services to the entire world. The challenges also affect the number of the customers that would freely subscribe to the use of the communication services provided by the Saudi Telecommunication organization. However, the slow but gradually development and innovation of new technological mechanisms in the firm has assisted in the reduction in amount of resistance offered to the organization.

One of the key challenges that faces the Saudi Telecommunication firm in delivering the appropriate communication links to the customers encompass of the stiff competition from other communication network providers. The Saudi Telecommunication is one of the best communication providers industries in African and the Middle East. However, it faces stiff competition from other emerging organizations and existing telecommunication industries. The services provided for the purposes of communication to the other industries vary hence might attract customers in diverse ways. The quality of the services provided to the customers who are desperately in need of communication purposes also matter in the communication field. The key competitors of the Saudi Telecommunication encompass of Orascom Telecom Holding S.A.E. in Egypt and Qatar Telecom (Qtel) in Qatar (Salibi, 2008, p. 125).
The services provided through the communication organizations vary with the customers and the regions. For instance, the communication services provided for the young people in institutions will automatically vary from the services provided to the people working in offices. The offers that are offered to the customers also vary with the usage of the communication links to the customers. The Saudi Telecommunication company offers communication links of the people in Middle East, Asia Africa and Europe with a communication passage. Without the communication services provided by the organization it is almost impossible for the people to communicate. However, other communication firms in the regions that make it possible for the people to interact socially. The availability of the communication network is one of the key determiners of the most appropriate network providers of the customers.

Most of the customers prefer the Saudi Telecommunication services because of its stable and steady network. Although, the organization faces communication competition from other firms, the stability and reliability of its services has ensured that it beats other firms. The firms mostly rely on the support of the Saudi Telecommunication firms boosters to offers services to the customers. The firm foundation of the Saudi Telecommunication is also another key advantage that the firm uses to overcome the hypercompetitive nature of the other communication providers. Competition has been a major challenge to the communication links that are provided by the organization. The numbers of the customers who are the subscribers readily to use the communication links are also left to make tough decisions especially concerning the best organizations especially concerning the appropriate networks (Mkisi, 2008, p. 138). However, well laid plans and structure of the Saudi Telecommunication makes it the suitable networks especially in Africa.

An additional challenge that faces the Saudi Telecommunication organization in providing communication services to the customers is the availability of adequate funds to run the projects. For the Saudi Telecommunication company to become one of the best industry, there are numerous projects that are in progress. However, the international initiative, which is currently the project in progress for the firm, requited to large sums of capital. The increase in the number of the boosters to enhance the communication network is another project needed for the expansion of the project. The expansion of the Saudi Telecommunication firm into the international levels requires the firm to spend more than the usual budget (Salibi, 2008, p. 131).

The increase in the demand of the network availability to the Europe and Asia continent is some of the aspects that contribute to the increment of the total capital required for the development of the communication company. For any given expansion to be undertaken in the entire Saudi Telecommunication organization, it requires large, amounts of capital. The development of the organization to the other established nations requires a lot of capital. Since the organization had spent large sums of capital in the construction and internet installation phase, it was almost difficult for the firm to afford the extra capital required for the expansion of the firm into international levels. The total amount of cash required by the firm also made the firms to look for extra means of capital providers.

The Saudi Telecommunication firm forced to use other financial sources such as banks and co-operate funds to raise the total amount of capital needed to run the firm. Since there was demand in the customers and the company needed more profits, there was need for the expansion of the firm. For this reason, there was no alternative way in which the firm would operate without the adequate capital. Although using the loans to expand the business is expensive, there was no other alternative other than borrowing the capital from the financial institutions.           
The benefits that Saudi Telecommunication Company (STC) gained entering the 6 countries Egypt, Yemen, Pakistan, Sudan, Nigeria, Tunis
By providing the fixed, broadband and telecommunication services to over 142 million people in the six countries with the inclusion of Saudi Arabia itself, it has emerged as the largest telecommunication company by market capitalization (IT News Africa, 2012). The expansion of the company telecommunication services to the six countries has enabled the country to capitalize its telecommunication market thus enhancing the country's market stability.

After the Saudi Telecommunication Company entering the six countries through the provision of telecommunication services to its subscribers, the country has significantly expanded its revenue allocation thus the country experienced a significant boast in its revenue. The Saudi Telecommunication Company became the second largest revenue generating business activity, after the oil production business thus increasing the country’s total annual revenue (Mkisi, 2008, p. 142).

By spreading its services to the six states, the country’s employment rate has drastically increased reducing the unemployment rate in the country. Both skilled and unskilled individuals were able to access employment opportunities in the 6 regions where the company spread its telecommunication services. Many of the people after being employed were transferred to the 6 countries to help in the provision of the telecommunication services. The country managed to conquer the unemployment problem thus leading to the improved living standards among its people.

The strong leadership joined with strategic investments has increased the shareholders value and enabling the Saudi Telecommunication Company to provide almost 98 percent of its coverage (IT News Africa, 2012). This has enabled the telecommunication company to come up with new services and products such as high-speed internet and blackberry in Saudi Arabia. Through the expansion of the Telecommunication services in the six countries, the Saudi Telecommunication Company made the first telecommunication company in the region to attain a strong rating by the Standard and Poor Ratings services in the country. This has given the company strong ties with other business operations thus enhancing the company’s stability.

The inclusion of Telecommunication services in the six countries has enabled the Saudi Telecommunication Company, to obtain a well-dignified leadership through establishing proper leadership organization in the six regions.  The leadership positions in the company improved thus enabling a well-structured company. The company’s has boasted its shareholding renting rates through the selling of its shares in the six countries. The company has managed to sell its shares in the expanded region to its customers thus boasting its total profits, thus leading the company to increase its total financial earnings (Salibi, 2008, p. 139).
The Saudi Telecommunication Company has expanded through improvement of its infrastructure in the six countries. The country has managed to improve its infrastructure in the 6 regions to be able to provide efficient services to its customers. The company has improved its technological services due to the need to provide efficient services to its customers. The company forced to improve technology due to the changing demands of its customers thus managed to provide quality services in the six countries.

With the expansion of the telecommunication services to the six countries, which included Egypt, Yemen, Pakistan, Sudan, Nigeria, and Tunis and the company’s success in the regions, the company has managed to expand its operations to other states apart from the six regions. This boasts the company’s desire to expand its telecommunication services to almost countries in the world thus boasting the telecommunication industry. The Saudi Telecommunication Company started telecommunication training institution in the six countries including the Saudi Arabia itself (Hall, 199, p. 123). The institutions have vastly expanded due to the desire for individuals to acquire the required skills and knowledge in working in the company. The institution boasts the company’s total revenue thus rated as the second largest revenue generating business.
The Saudi Telecommunication Company has experienced drastic growth over the past years after the inclusion of its telecommunication services to the six countries. This boasted the total revenue of the company thus encouraging more and more expansion of its business unit. The company has decided to expand its telecommunication services beyond the six countries thus to become a worldwide business operation centre (IT News Africa, 2012). The company has had to improve its technology to suit the customer’s needs and demands.
            This is one of the most successful countries economically in the continent. During the early years before 1990, the country was experiencing trouble economically. The reason for this was the political wrangles, a reform that the country has made in the last two decades. Currently, the country is experiencing a boom although it also felt the effect of the global crisis four years ago. The country has a relaxation on all rules that would support price controls. The country’s economy does not also support subsidies and, therefore, Egypt experiences low levels of inflation. The trade in the country is particularly liberalized and any interested investors have an easy time with the rules (United States, 2012, p145). As a correction of the past, most of the manufacturing industries are now under the hands of the private sector. There are also limited regulations in the fields of agriculture except for some few crops. The government also encourages privatization of construction and services in the country. Therefore, the country has a stable economy, is currently experiencing an upward trend in growth, and is now a middle-income country.

Operations of STC have been greatly under the influence of the current economy. The global crisis must have been one reason that would discourage the company from investing in this foreign country. In addition, the privatization of this sector means that there are already other local companies providing the services. This is due to the ease of entry into the market, which discourages foreign investment. Most of the people in the country are middle-class and thus are already using telecommunications. Therefore, the company has found nothing new to offer to the country. Thus, STC has resulted to seeking of collaborations with other companies in a bid to get a chunk of the market (United States, 2012, p145)
Most of the reliance of the economy of this country is on oil. However, this has turned out disastrous since currently the resources are depleting fast. As a result, the government has tried to turn the fortunes of the country by diversifying the economy through a plan from 6 years ago. However, the increasing population and reduction in water undermine all these efforts. Reliance of the country on services has been on a decline in the last decade, which is a result of the poor infrastructure within the country. Minority of the population works in the industry sector with most preferring agriculture. These are conditions that STC has to deal with in its operations within this country (United States, 2012, p256). The reduction in the reliance on industries has meant that the company must bear with the situation and, therefore, low returns. The poor infrastructure also poses a problem to the company especially with the advancement on technology that requires better infrastructure. There is also lack of appropriate labor for the company. This is all due to the willingness of most of the citizens to work in the informal sector of the economy.
This country has a very stable economy and is among the best in the world. This stability is attributable to appropriate policies that have proved vital in the reviving of the economy. Long disputes in the past have been the major undoing of the economy in the past, despite the valuable resources that are in the country. The welcoming of foreign investment by the country has also influenced the boost.  The communication industry has performed ominously towards the economy leading to major use by the citizens. This is attributable to the deregulation of this industry. These conditions have made it easy for STC to make a grand entry into the country. The encouragement of foreign investments in the country has attracted the company to collaborate with the already existing companies. Deregulation of the industry also has a great impact on the involvement of the company in the economy of this country (United States, 2012, p321). This is because this gives the company a lot of free ill and freedom to enter into the market. The willingness of most of the population to own up telecommunications has also encouraged the company to participate in the Pakistani.
The main challenges to the economy of this country are civil war and poor economic policies. Overreliance of the country is in the field of agriculture where majority of the people work. However, the country is now also dependent on oil as a major resource for the country. Most of the agriculture does not offer anything to export and in fact, is for local consumption. The country has poor policies when it comes to industries. In fact, there is low participation in industries as a contributor to the economy. Because of this weak economy, the country has always welcomed the assistance of other countries. There are few restrictions for the companies that are willing to enter the market. The economy of the country is weak and needs a lot of diversification for efficient growth. Saudi Telecommunications Company has faced all these challenges in its entry into the market. The lack of support from the government in the industry has also been a problem since the company has to combat many challenges on its own. The reliance of the population on oil and agriculture also means that most of them are not willing to offer labor in thus industry. There is also a challenge in market since majority is also unwilling to adopt the new technology. In fact, most of them cannot afford, evidence of which is the importation of foods from other countries. However, success for the company has been made possible by the friendliness of the country to the home country of STC.

The country has a stable economy with a high rate of growth. It is competing amongst the other countries and if the current growth is anything to go by, then it is on course to becoming one of the best economies. The base of the economy is oil, with the country being a leading producer. Apart from this sector, the country also relies on the informal sector. The agriculture sector is a pillar in the country although it is largely subsistence. This is because the population has been on the rise and there has been no link between the two. Through this stability, the country has been able to settle off some of their national debts unlike other countries. The government encourages the growth of private ownership in a bid to improve the economy although there are restrictions.  However, corruption and other unethical issues have been the major undoing of the economy of the country. STC has also connections within this country after expansion a few years ago (Annual report, 2010). The need to duplicate their infrastructure is a challenge considering that it is foreign. Crime makes it worse since the infrastructure that the company invests in is under risk of theft. However, the large population is enough market for the company and the high demand for its services. This means that the company has a large pool of labor from which they can get human resource. Therefore, the company has been able to record success in the country.
The economy of the country has been under the control of the government for many years. However, the country is trying to liberalize the economy in a bid to seek improvement. Most of the fields in which it relies on are agriculture and minerals. There are also instances of manufacturing and tourism in the country. There is encouragement for other foreign countries to enter the market of the country. This is especially in the communications industry, which is not flamboyant within the country. Most of the external relations are from Europe although there is also trade with other Arabian countries. There are still some limitations that exist for investors in the country when it comes to ease of entry. Saudi Technologies Company has found a niche in this country and has exploited the opportunity. The good relations with Saudi Arabia have made it relatively easy for the company to lay its foundation. The efforts by the government in liberalization of the economy are also an encouraging factor for the growth of the company. There is also limited competition in the industry, which gives STC an advantage. The economic structure of Tunisia is also appropriate for the existence and growth of STC.

List of references

Annual report 2010 (2010).

Hall, R., Ernest, 1993. Long distance: public benefits from increased competition. Menlo Park, Calif.: Applied Economics Partners
Mkisi, N., Eliah, 2008. Application of Human Resource Management initiatives for workers motivation and organisation performance in telecommunication sector in Tanzania. Rotterdam: Erasmus University; 2008. Print.
Salibi, M., Joseph, 2008. The privatization of Alfa and MTC Touch examining the intricacies and advantages of change. New York: Oxford
IT News Africa, 2012. “Saudi Telecom selects Alcatel-Lucent for LTE trial” IT News Africa Retrieved 14 May 2012
United Nations Conference On Trade And Development (2007). Information economy report 2007-2008: science and technology for development : the new paradigm of ICT. New York, NY [etc.], United Nations.
United States. (2011). The CIA World Factbook 2012. New York, Skyhorse Pub