Saudi Arabia Internet Technology and Telecommunications Industry Analysis - Coursework Example

Saudi Arabia IT and Telecommunications Industry Analysis Saudi Arabia, a country in the middle east is recognized as the world`s largest consumer retailer of electronic equipments. The country, which is located in the Middle East, borders Arabian Gulf to the north and Red Sea south of Yemen. The country has rich mines of oil and due to the many programs run by the government it has plans to privatize electricity and telecommunication companies. Saudi Arabia has been on the verge to spearhead its information technology and telecommunication industry since 2001. By then, the company had been nationalized when the supreme authorities of the country passed new policies to privatize the industry hence reduce the monopoly powers of the same industry (Desai 249). This was meant to make the telecommunication industry in the country expand and upgrade its management of network. The Saudi Arabian information technology and telecommunication industry has grown substantially since 1970 up-to-date by advancing its capacity by 3.5 million telephone lines. These subsequent expansion and privatization of telecommunication industry has drawn national recognition in this seventh development plan. Currently the markets are hot and their maintenance is not guaranteed. Manufacturers will have to rely on big money generating projects with personal relations being the main leeway to winning these deals (Oxford Business Group 102). There are possible opportunities in Saudi Arabians IT and telecommunication industry particularly with the wireless communications though there are barriers of its expansion. Complicated bands of telecommunications have been restricted to defense and aviation programs though it is anticipated that the government will ultimately free this authority. The launch of GSM has shown possibility of privatization and consequent expansion of broadband service available for the wireless (Al-aklabi and Al-Allak 76). Saudi Arabia has key pillars that are quite promising in shaping the next growth sectors in the technology field. The youth favoring population of Saudi Arabia shows high potentials of future technological growth. Youth can be perceived as the drivers of telecom development as they posses the prime purchasing power of technological products and services. This pillar continues to be the motivating factor for telecom industry hence the economy of Saudi Arabia (Jasimuddin 60). The mobile operators have on their side been providing services that favor the youth or target the youth segment as their possible clients. In Saudi Arabia, there has been a surge in internet consumption. This has tripled in the past four years and is expect to be on the rise side in the future. It can be attributed to public awareness on effectiveness of software (Desai 249). The availability of cheap private computers and a fast broadband server have been a catalyst to technological advancement. The inception of smart phone and other technical devices in Saudi Arabia has been a big step made in technological arena. Since the launch of iPad, blackberry, N-series, there has been a stiff competition in the research field trying to innovate the much current appliance. The graph below shows the development of the industry following the launch of four commercial networks (Zain Saudi, STC, Mobily, and UAE) Retrieved on March 28, 2012, from http://www.africantelecomsnews.com/archive_graphics/15Q4_LTE_users.gif Further still, in Saudi Arabia, there has been a change in consumer purchase patterns where the internet has been the immediate option. The service has been used extensively in a wide field of application and has even spread to other countries .Its real benefit is noted by expatriates who from time to time have to remit monies to their mother countries. Saudi Arabia confronts global finances due to its motherly source of oil thus great requirement of developed ICT hence its fast development (Al-aklabi and Al-Allak 81). Business sector in Saudi Arabia has grown due to its effectiveness and competitive nature out of the much-advanced technology. Assertively, Saudi Arabia is in vast technological growth and in future, it focuses on merge of the specific technological fields to capitalize on pillars of chosen strategies. The Saudi Arabian government looks at ensuring that the information technology and telecommunication industry is conceptualized to boost and diversify the economy of the country. The consequent increase in demand for smart phones has compelled vital decision making on choice of devices to trade on (Jasimuddin 63). In the entire Arabic States, Zain and MTN are the main multinational telecoms with zain been ranked high in Iraq and Kuwait. In Saudi Arabia, Zain still has a large market share. The table below shows comparison of Zain dominance in Saudi Arabia and other nations, Retrieved on March 28, 2012, from http://www.pday.com.cn/UpLoads/article08/2009/2009060302.gif Technology in Saudi Arabia has been on its rising end availing gadgets that are more complicated as well as more advanced services. Information technology has mad a huge step in inventing a cashless transaction. Saudi Arabia has many companies that provide integrated communication services. Among them, is the Saudi Telecom Group (STG) based in Riyadh and recognized as the countries biggest in terms of number of workers, total output, and capital investment. STG has spread its branches to other countries thus has an international recognition. In 2004, the company was franchised allowing it to compete with mobile industry. Saudi Telecom Company has benefitted its customers largely on its chase to attract more customers that are new. It has marginally reduced its internet charges as well as the communication charges (Information Gatekeepers Inc 9). Bahrain is another telecommunication company in Saudi Arabia that provides telecommunication service. It is composed of different companies from various countries in Asia, serves both consumers, and cooperate markets. BATELCO is the most liberalized company in the region and offers high competition to other firms in the industry. Among the competing companies that compete alongside with STC is the Etihad Atheeb telecommunications Co. This fixed line operator providing fixed services was established in2008 in bid for public fixed service provision. The company allows easy and reliable access to internet services. Oger telecom is an emerging telecommunication operator on fixed lines, mobile and broadband services. Oger telecom provides an Oger way, which is a conceptualized mode of communication that is adaptive to any new innovated technology (Information Gatekeepers Inc 9). Graph showing mobile telecommunication company in Saudi Arabia (ZAINKSA) Retrieved on March 28, 2012, from http://www.asmainfo.com/Charts/chart.aspx?Provider=Moby&Code=7030.TASI&size=566*300&Layout=Newc&Over=MA(10)%3BOVERLAYV!%3BAdjusted&Span=Year1&SV=1&Skin=GreenOcc&Type=2&Width=1&Adj=True The economy of Saudi Arabia has experienced cycles of growth and decline over years. This came about after a dramatic upward fluctuation of oil price in 1970s. In spite of all these economic changes, Saudi Arabia has not been able to achieve its economic target. Two factors have been responsible for this economic retardation. The high rate of population growth is the first reason. Saudi Arabia records population increase of three percent annually (Al-aklabi and Al-Allak 86). This large population has created a lot of stress to the government of Saudi Arabia as it directs its resources to providing social amenities and basic needs to this huge population (Que 8). In this large population, there is economic strain because of insufficient jobs for all these personnel. The other factor affecting economic growth in Saudi Arabia is fluctuation of oil prices in either direction. Saudi Arabia has opted for other economic resources other than oil to curb this problem. However, the country has predicted a continuous economic growth though not evenly across all its regions. Saudi Arabia though considered as of one of the most developing countries is experiencing severe shortages of trained work force. The country has thus been forced to import a large number of expatriates to execute the massive development projects (Jasimuddin 67). The country records low levels of technical education impartation and vocational training to its youths. The government of Saudi Arabia has been having hard time in reinforcement of its policies meant to develop country`s wealth. The ultimate cause of this is lack of concrete association between different government departments. Thus, there is diversity in performance of different government parastatals. In addition, the state organizations are not in position to draft and implement policies thus cannot mitigate the negative sides of the central government. There is also establishment of policies that restrict political and economical interest (Que 3). All these harbor government regulations in Saudi Arabia. According to Fatani’s article, many industries in Saudi Arabia attained their estimated size. Some due reasons as to why this has been happening could be fraud, incompetence, misappropriation of funds, and poor management. Trade liberalization and the population growth have exposed risk of disposal of poor quality goods as well as deterioration of local industries. The steep rise in the prices of oil has adversely affected local industries making them unable to achieve their goals. Competitiveness is a situation where a supplier can supply goods in the given market through powers of will and ability has challenged suppliers. High pricing of goods lower the demand hence the rate at which goods are sold in the market. Other factors that affect demand are changes in tastes and preferences of customers, seasonal factors where some goods are used seasonally like umbrella. Transactions are made purposely to get profit (Oxford Business Group 101). This ultimate goal may fail to be achieved may fail to be achieved because of some reasons like sales or material price changes. Political influences, climatic changes, and general supply issues can affect the prices of goods. Change of labor and its related costs also can lead to change in market demand. Financial ratios are used to determine the value of stock as at a given time. It is good to keep financial ratios and analyze them after an accounting period in order to get to know the potential of the business as after a certain period. In spite of their goodness, financial records have limitations. For example, the large businesses that operate under different departments find it hard to set a standard financial ratio, which is average. Inflations can by a large margin distort the financial ratio, for instance where the grand profits are affected the analysis might be compared with judgment or raise uncertainty to the employer over the employee`s trustworthiness. Seasonal factors can also distort the financial ratios like during holidays or festive seasons like Christmas the difference might be huge compared to the recession (Oxford Business Group 102). Generalizing on the matter of whether the ratio is good or not depending on historical know how can lead to misinterpretation hence landing on irrelevant financial record. This irrelevant ratio might incur a lot of cost to the business and end up being unhelpful. Entering wrong information may lead to wrong translation hence not giving the true picture. Financial records are one kit in management that is they only show where the problem is and do not exactly pinpoint the problem. In general, Saudi Arabia software and telecommunication Industry has weaknesses and strength as evident in this paper. The table below gives a summary of the weaknesses and strengths. Retrieved on march 28, 2012, from http://www.ibimapublishing.com/journals/IBIMABR/2011/126226/Table%20A.jpg In conclusion, different companies use different methodologies in running their businesses thus when comparing two different businesses it might not give the exact picture of the two entities. Since financial ratios are calculated at the end of trading period, they may not give the same information as if they were analyzed before the accounting period was over. Despite their many limitations, financial ratios are still worth to be kept though wisely and with a lot of keenness. Work cited Al-aklabi, Ayed and Al-Allak, A. basher. Saudi telecommunications Company: A Strategy for Sustainable Competitive Advantage. Journal of Advanced Social Research, (2011), 1, pp. 76-88. Desai, V. Ashok. Indias telecommunications industry: history, analysis, diagnosis. New York: SAGE, 2006. Print. 249 Fatani, H. Afnan. The State of the Translation Industry in Saudi Arabia. Translation Journal. Web 27 March 2012. Information Gatekeepers Inc. Africa telecom. Information Gatekeepers Inc, 2007. Print. 9 Jasimuddin, M. Sajjiad. Analyzing the competitive advantages of Saudi Arabia with Porter’s model. Journal of business Industrial Marketing, (2001), 16(1), pp. 59-68. Oxford Business Group. The report: Emerging Saudi Arabia. Oxford: Oxford Business Group,2011. Print. 102- Que, Josep et. al. The Rise of Saudi Arabian telecoms: Unrivalled promise and opportunity in a vibrant market. The Delta Perspective (2010). Web 27 March 2012. Read More