IV. A1: TEAM CASE STUDY Essay Example
SWOT Analysis: Case Study of Du Telecoms
SWOT Analysis: Case Study of Du Telecoms
Du Telecoms is one of the two main telecommunication companies in the United Arab Emirates. The company offers mobile and fixed line telephone services as well as broadband services. Du launched its services in 2007, and has its shares listed at the Dubai Financial market. The company has more than six million subscribers making it the second largest telecom company in the UAE by number of customers. Although Du telecom has only been in existence for less than 19 years, it has grown its market share steadily to 45% of the mobile telecoms market in the country. Du’s main target markets are the individual and business customers. The company offers different services and products specifically tailored to meet the different needs of each of these target markets. Moreover, the company has simplified its tariff structure by introducing special rates for domestic and international calls (Du Telcom, 2016).
One of the factors that have contribute to Du’s rapid growth is that the telecommunications sector is one of the fastest growing industries in the United Arab Emirates, and the most developed in the Middle East region. The telecom reforms implemented by the government in accordance with the WTO mandate have led to an unprecedented growth in in the level of competition and quality of services in the county’s telecommunications industry. In addition, the UAE’s decent population, technological advancement, world-class infrastructure and growing business enterprise have contributed to the growth of the telecommunications industry. All these have enabled Du to attain tremendous revenue growth and impressive profits. The company continues to offer innovative services, low cost internet and call services and impeccable customer services which have made the Du brand very popular among its customers (Nuqudy, 2012).
Strengths and Weaknesses of Du
The greatest strength of Du is that it is the second largest telecomm service provider in the UAE. Although it has been in the market for a very short time, the company has recorded impressive growth in customer base and revenue growth, making it a dominant player in the industry. The second strength is strong brand equity. Du is one of UAE’s most visible brands because of its superior services and heavy investment in marketing advertisements. The company’s network is superior and highly reliable, making it more attractive to customers. Strength is that the company has a well-established infrastructure in the geographic regions it serves. Du has invested in state of the art technologies such as a high capacity fiber optics system and cable equipments, which enable it to offer high speed internet and call services. The company continues to upgrade its systems to remain competitive in the industry (Du Telcom, 2016).
The main weakness of Du is that it has outsourced most of its core operations. Although outsourcing was necessary when the company was formed because it did not have experience in the telecom industry, the process is very costly and makes Du’s business more vulnerable. Continued outsourcing means that the company is running the risk of being dependent on other companies, which may affect its operations. Another weakness is that Du has been unable to expand into neighboring countries in the region and therefore relies on a small market for its profitability. Expanding into neighboring countries as well as North Africa can make Du a global competitor. Lastly, the company has huge debts which it used to establish the business. Most of these debts are yet to be repaid.
Opportunities and Threats Faced by Du
The telecoms industry offers many opportunities for Du to expand its business, gain more customers and develop greater competitive advantages. One of these opportunities is growth in mobile internet. In recent years, mobile internet has been identified as the fastest growing subsector within the telecoms industry. Through its developed infrastructure Du has opportunities to expand its capacity within this area. Another opportunity is the growth of digital content. There are opportunities for Du to diversify its businesses into the creation and distribution of digital content for its customers. For example, the company can develop social networking platform to enable customers to stream digital content such as music, videos books. The third opportunity is the increasing demand for internet content in the Arabic language. Currently less than 1% of all internet content in the UAE is in Arabic. By offering internet content in Arabic, Du will make the internet more culturally sensitive to the Arabs (Al Mal Capital, 2008).
The main threat facing Du is increased competition from new and established telecoms. Following the liberalization of the telecoms sector, there is a high threat of new (mostly foreign) telecoms entering the industry. New entrants that offer innovative services using world class technology may lure Du’s customers away. This would cause market saturation, which will impact the profitability of Du. Another threat faced by the company is increasing business costs. The telecoms industry is capital intensive and the cost of doing business escalates as the company ventures into new business units or upgrades its systems. Lastly, economic recession and increased government regulations are other important threats that may prevent Du from realizing its short term business objectives.
Strategies for Improving Financial Performance
The most important strategy for improving financial performance at Du is for the company to diversify its business. Diversification reduces risks of business losses and therefore improves financial performance (Adrian, 2000). Du can pursue conglomerate, horizontal or concentric diversification strategies. Concentric diversification involves introduction of a related but new service in the market. For example, the company can launch low cost internet TV to compete with the traditional TV service providers. Conglomerate diversification involves introduction of new businesses that are not related to the current ones. For example, Du can invest in the financial sector by offering mobile based finical services. The current has good infrastructure for offering these services. Horizontal diversification involves introduction of unrelated but new products to existing customers. This strategy is less risky than both concentric and conglomerate diversification and can result in improved financial performance.
The second strategy for improving financial performance is to focus on reducing costs. For example the company can stop outsourcing some of its services by acquiring its own equipments and systems for offering the services. The company should also focus on offering different service packages to satisfy different customer needs. As Boyland and Giuseppe (2000) note, consumers of telecom products have diverse needs and preferences. By developing products that are capable of satisfying these diverse needs, Du can gain more customers and ultimately improve its financial performance. Lastly, the company should increase its spending in promotional campaigns to create increased awareness about its products.
Strategies for improving marketing and operational efficiencies
Du can improve marketing and operational efficiency by leveraging its core strengths. The company has a good brand name, a well-developed infrastructure and a steadily rising customer base. By committing to these strengths, the company can accelerate success in marketing and operations. Most importantly, the company should set goals for performance improvement in marketing and operations divisions. The company can also improve efficiency by training its staff to be more productive and committed. Employees are an important strategic asset in the Du’s business. By offering the right training and development opportunities, the employees will be more productive, which will lead to improved efficnvy in marketing and operations (Adrian, 2000).
Defining and segmenting target markets and consumer personas can also help Du to improve the efficiency of its marketing and operations functions. The fast changing nature of the telecoms industry means that the sector has entered the era of contextual marketing, which requires personalized marketing services (Boyland & Giuseppe, 2000). In order for Du to improve marketing efficiency, there is need to develop targeted marketing campaigns and communications. This will involve clear definition of the target markets. Through market intelligence, Du can gather valuable information which it can use to segment its markets so as to develop tailored products to address the identified needs. The company can improve operational efficiency by addressing internal obstacles such as conservative organizational culture and legacy system.
Adrian, P. (2000). Principles of Marketing. Newyork: Oxford University Press.
Al Mal Capital. (2008). UAE Telecom Sector: Initial Coverage Report. Dubai: Al Mal Capital.
Boyland, O. and Giuseppe, N. (2000). Regulation, market structure and performance in telecommunications. Organization for Economic Cooperation and Development: Paris.
Du Telcom. (2016). Home services packages. Retrieved October 10, 2016 from http://www.du.ae/en/athome/talk-surf-watch
Nuqudy. (2012). UAE Telecom Sector to Grow 15%. Retrieved October 10, 2016 from http://topnews.ae/content/2767-uae-telecom-sector-reports-record-growth
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