An Environmental Scan for Vodafone, a UK company expanding to the Sultanate of Oman, a Persian Gulf Nation - Essay Example

An Environmental Scan for Vodafone, a UK company expanding to the Sultanate of Oman, a Persian Gulf Nation Introduction Oman is a small nation located in the Persian Gulf region of the Middle East. It has a long-standing history of being a powerful monarchy that has been ruled by dynasties of Arab nobles. Vodafone is a global telecommunications operator with its headquarters in the UK. It started as a small UK mobile operator in 1985 and has grown to become a global entity. Vodafone has a significant presence in Europe, the Middle East, Africa, Asia-Pacific and the United States.

In order for Vodafone to get optimum results in Oman, it is important that it utilises the principles of strategic planning, which is “a management tool to look at the future and see tomorrow’s opportunities or challenges to gain competitive position” (Allkhafaji, 2003) Allkhafaji goes further to mention some elements of strategic planning which involves matching the components of the internal environment against elements of the external environment to get good companywide strategies that span over a long period of time.

External Environment Analysis “There are six groups of factors found in the wider environment which affect a whole population and the organisation it serves – PESTLE” (Rieple & Harberg, 2008). The components of the external environment that PESTLE examines are Political, Economic, Social, Technological, Legislature and Environmental factors. Political: Oman is ruled by a Sultan. The Sultan acts as head of state and a figurehead for the nation. There are ministers and undersecretaries who are appointed by the Sultan. David C. King (2007) reports that there is limited check and balances on the ministers and undersecretaries appointed by the Sultan and this have caused some cases of inefficiency and accusations of corruption in the government.

Currently, there are reports in the media of demonstrations being held in Oman. It is likely that these demonstrations will end up in reforms and not a complete change in government. Economic: The Omani economy is based on oil resources, but this is fast being depleted and it is expected to run out by 2022(Ministry of Information website). Due to this, the government is fast diversifying the economy to ensure that the nation gets other sectors to fall on for revenues. One popular area is to use the geo-strategic position of Oman as a re-export point for products being sent to and from India, China, the Middle East, Africa and the rest of the world.

Oman’s GDP was $76.53 billion in 2010 and this GDP per capita was $25,800, ranked number 52 in the world. Oman’s unemployment rate stood at 15% and inflation was at 4% (Ministry of Information website). The government policy is to create an economy based on private enterprise and competitive environment devoid of monopolistic practices (Omaninfo.com) Social: The people of Oman are generally of a friendly and hospitable nature. They are all ready to preserve the heritage and rich culture of their forefathers.

Oman is an Islamic state and the people often wear Arab robes and garments. The people maintain strong ties with their extended families and identity is based on the kind of family you belong to. The concept of ‘Omanisation’ is encouraging and nurturing natives to acquire skills and expertise in different fields. The population of Oman is around 2.7 million and the labour force is approximately 1 million (Omani Census Website). However, when this small population is contrast with the wealth that is flowing in the economy, it is apparent that Oman is one of the smallest nations of the world but holds high concentrations of purchasing power amongst individuals.

Technology: Oman mainly imports its technological knowledge from outside its borders. The IT and telecommunication industry is filled with so many expatriates from India, USA, Europe (particularly Denmark) and other nations around the globe. Also, there are many international innovators that access the Omani markets directly with new products and services from time to time. Legislature: Oman is a nation that was under the full control of Sharia and Islamic scholars for centuries until the 1970s (King, 2007).

However, with the reforms of Sultan Qaboos after 1975, there have been several changes that incorporate modern forms of Islamic law that has adapted to various influences, mainly from English law. Environmental: Oman has local laws that protect the environment with an aim of conserving and maintaining eco-balance in the nation. Oman’s oil industry is also run under very strict safety standards to prevent oil spills which can cause the small nation a lot of inconvenience. Industry Analysis For Vodafone to succeed in the Omani market, there is the need to scan and evaluate the Omani telecommunication environment.

Stahl& Grigsby (1997) explained Porter’s Five forces that affect a given industry as follows: They stated that every organisation has rivalry amongst its key players. These entities define the industry because they produce similar products and compete for the same market share. These are the primary competitors in the industry. However, there are some forces that can enter and influence the industry ‘vertically’. These forces include the risk of entry by potential competitors and the threats of substitutes entering the market.

These organisations can change the form of the competition that exist in the industry. ‘Horizontally’, other elements can come to play to change the structure of the industry. These horizontal entries come in the form of suppliers gaining too much bargaining power and buyers gaining too much power. On entry into the Omani market, the main competitors will be Omantel, which was the only telecommunications operator until 1997 when the Telecom Regulatory Service liberalised the system. Omantel provides mobile services, landlines, internet and other forms of electronic communications in the country.

Majan Telecom, Nawras Telecom, Renna and Samatel provide mobile and limited internet and landline services to the Omani public. When Vodafone enters the market, the vertical competitor forces of the industry will be the risk of other foreign or local operators or collaborators, entering the market to set up telecom companies that will also compete to take over the markets. Another vertical competitor will be operators who provide substitute services for the Omani public. Examples include Voice over IP (VOIP) service providers like Skype, MagicTalk and Gtalk.

Also, internet-sms service providers can establish branches in Oman that can take over the market. Horizontal entry into the industry include situations where entities that Vodafone and the Omani telecom companies provide services for, becoming too powerful to dictate terms to them. An example is the Omani public sector. Although they are inclined to lean towards the services of Omantel, it is possible that they can come together, as a significant element of the nation to threaten to move to other providers (like Vodafone if it becomes a big competitor in Oman).

This will change the industry tremendously. Additionally, suppliers of consultancy and other technical services in the country can become too powerful, especially if there are limitations on the entry of other consultants and engineers. These few consultants/engineers can control the industry. Internal Analysis One of the best tools for analysing an entity’s internal system is the TOWS matrix. It arrays a company’s strength and weaknesses against opportunities and threats and this can give the organisation a sense of purpose and direction.

Vodafone’s TOWS Matrix Internal/External Strengths 1. Vodafone has the necessary expertise for cross-cultural discourse 2. Vodafone is a popular global brand 3. Vodafone has a presence in the Middle East 4. Vodafone has a focus on expansion 5. Vodafone has the necessary resources for expansion 6. Vodafone observes high quality systems and processes Weaknesses 1. Vodafone is not a local brand. 2. Vodafone is a Western brand 3. Vodafone thrives on economies of scale 4. Vodafone is expanding on many fronts. 5. Vodafone does not have the ability to cover large isolated areas Opportunities 1.

Vodafone can put in place sound cultural structures that will lead to its acceptance. 2. Vodafone can win the marketing war by relying on its ‘global’ status. 3. Vodafone can transfer staff from Qatar to easily take over in Oman. 4. Expansion to Oman should not be a difficult task for Vodafone 5. The necessary capital to expand to Oman can be raised easily 6. High quality can build customer loyalty. S/O Strategies 1. Vodafone must examine the cultural strategies used in other nations and plan for Oman. 2. Vodafone needs to plan programs that will assure Omanis of how it has succeeded elsewere. 3. A plan should be drawn to shuffle staff between Oman and Qatar with minimal effects on operations. 4&5. A strategy for efficient allocation of resources should be put in place. 6. Vodafone needs to draw a marketing plan that will incorporate quality as an important watchword.

W/O Strategies 1. Vodafone can ‘Omanise’ their brand to make it acceptable 2. Vodafone can employ as many Omanis and non-Westerners as possible to ensure that the ‘global’ status is utilised. 3. Vodafone can merge the Omani and Qatari operations to ensure that costs are shared. 4. Proper allocation of resources should be carried out. 5. Vodafone can start in areas with high populations and move to other areas gradually. Threats 1. Omanis might want to preserve their ties to local brands. 2. There is the risk of Vodafone brands being targeted by foreign terrorists. 3. Oman is a small country that might not offer economies of scale and hence not be profitable 4.

With the numerous expansion drives, Vodafone might not concentrate enough resources in Oman due to the population. 5. With low population densities outside the capital, it might be difficult for Vodafone to enter and operate in other regions. S/T Strategies 1. The ‘Omanisation’ of Vodafone should be done with reference to cultural theories. 2. The Global status of Vodafone should be used as a shield. 3. Vodafone can make an effort to merge the Qatari and Omani operations to cut costs. 4. Expansion into Oman should be carefully monitored. 5. Vodafone needs to invest carefully on which areas to move into and at what times.

W/T Strategies 1. Again the “Omanisation” of Vodafone is a must. 2. Vodafone must use as many non-Western staff as possible. 3. Vodafone must spread costs between the Omani and Qatari branches. 4. Vodafone must allocate resources wisely in Oman. 5. –do- References Allkhafaji, Abbass, F. (2003). Strategic Management: Formulation, Implementation & Control in a Dynamic Environment. NY: Haworth Press Hussey, David (1998) Strategic Management: From Theory to Implementation Oxford: Butterworth-Heinemann Joyce, Paul & Woods, Adrian (2001) Strategic Management: A Fresh Approach to Developing Skills, Knowledge & Creativity London: Kogan Page King, C.

David (2007) Cultures of the World: Oman Marshall: Cavendish Budwall Omani Census Website. Available at http://www.census.gov.om. Accessed: 03/03/2011 Oman National Information. Available at http://www.omaninfo.com. Accessed: 03/03/2011. Omani Ministry of Information Website, Available at: http://www.omanet.om. Accessed: 03/03/2011. Rieple, Alison & Haberberg Adrian (2008) Strategic Management: Theory & Application Oxford: Oxford University Press Sadler, Philip (2003) Strategic Management London: Kogan Page Stahl, Michael & Grigsby, David, W. (1997) Strategic Management: Total Quality & Global Competition Oxford: Blackwell Publishers Vodafone Website, Available at: http://www.vodafone.com.

Accessed 04/03/2011 Weihrich, Heinz (1982) “The TOWS matrix – A Tool for Situational Analysis” in Long Range Planning, April 1982.