Case Study Description of Orascom Telecom: Risks of Internationalization
Orascom Telecom Holding S.A.E. (OTH) was established in 1998 in Egypt and had grown exponentially to become one of the major players in the global telecommunications market. OTH was considered to be among the largest and most diversified network operators in the Middle East, Africa and South Asia. Orascom Telecom Algeria (Djezzy) was launched in February 2002 and it grew to become the market leader in terms of both subscriber numbers as well as the quality of telecommunications services provided. Djezzy served more than 14.7 million subscribers on its network and had a 62.9 per cent market share. After the great success Orascom had realized in Algeria, Orascom wanted to further expand. The manager thought that India could also be a great opportunity in which Orascom could expand its business. In 2006, OTH agreed to acquire a 19.3 per cent stake in Hutchison (HTIL) to penetrate the Indian market. India was an excellent opportunity as there were strong complementary similarities between Orascom and Hutchinson Telecom: both were successful operators offering mobile services in countries with large populations and low penetration levels of telecommunications services. However, despite this appearing to be an excellent opportunity, Orascom was not able to complete this operation because it did not consider the expenses in an accurate way and many factors were ignored, concentrating only on the positive aspects.
Authors :: Marina Apaydin, Dina Zaki, Farah Zahran
Swot Analysis of "Orascom Telecom: Risks of Internationalization" written by Marina Apaydin, Dina Zaki, Farah Zahran includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Orascom Oth facing as an external strategic factors. Some of the topics covered in Orascom Telecom: Risks of Internationalization case study are - Strategic Management Strategies, Business education, Competition, Mergers & acquisitions, Sustainability and Global Business.
Some of the macro environment factors that can be used to understand the Orascom Telecom: Risks of Internationalization casestudy better are - – challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings, talent flight as more people leaving formal jobs, increasing commodity prices, increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%, central banks are concerned over increasing inflation,
increasing household debt because of falling income levels, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Orascom Telecom: Risks of Internationalization
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Orascom Telecom: Risks of Internationalization case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Orascom Oth, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Orascom Oth operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Orascom Telecom: Risks of Internationalization can be done for the following purposes –
1. Strategic planning using facts provided in Orascom Telecom: Risks of Internationalization case study
2. Improving business portfolio management of Orascom Oth
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Orascom Oth
Strengths Orascom Telecom: Risks of Internationalization | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Orascom Oth in Orascom Telecom: Risks of Internationalization Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Orascom Oth in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Low bargaining power of suppliers
– Suppliers of Orascom Oth in the sector have low bargaining power. Orascom Telecom: Risks of Internationalization has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Orascom Oth to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Global Business industry
– Orascom Telecom: Risks of Internationalization firm has clearly differentiated products in the market place. This has enabled Orascom Oth to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Orascom Oth to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Orascom Oth is one of the leading recruiters in the industry. Managers in the Orascom Telecom: Risks of Internationalization are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Orascom Oth digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Orascom Oth has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Successful track record of launching new products
– Orascom Oth has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Orascom Oth has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Organizational Resilience of Orascom Oth
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Orascom Oth does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Diverse revenue streams
– Orascom Oth is present in almost all the verticals within the industry. This has provided firm in Orascom Telecom: Risks of Internationalization case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Highly skilled collaborators
– Orascom Oth has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Orascom Telecom: Risks of Internationalization HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Cross disciplinary teams
– Horizontal connected teams at the Orascom Oth are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Operational resilience
– The operational resilience strategy in the Orascom Telecom: Risks of Internationalization Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Effective Research and Development (R&D)
– Orascom Oth has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Orascom Telecom: Risks of Internationalization - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Orascom Telecom: Risks of Internationalization | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Orascom Telecom: Risks of Internationalization are -
Interest costs
– Compare to the competition, Orascom Oth has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Aligning sales with marketing
– It come across in the case study Orascom Telecom: Risks of Internationalization that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Orascom Telecom: Risks of Internationalization can leverage the sales team experience to cultivate customer relationships as Orascom Oth is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, Marina Apaydin, Dina Zaki, Farah Zahran suggests that, Orascom Oth is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Orascom Oth is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Orascom Telecom: Risks of Internationalization can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Orascom Oth needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High operating costs
– Compare to the competitors, firm in the HBR case study Orascom Telecom: Risks of Internationalization has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Orascom Oth 's lucrative customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Orascom Telecom: Risks of Internationalization, it seems that the employees of Orascom Oth don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Orascom Oth supply chain. Even after few cautionary changes mentioned in the HBR case study - Orascom Telecom: Risks of Internationalization, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Orascom Oth vulnerable to further global disruptions in South East Asia.
Lack of clear differentiation of Orascom Oth products
– To increase the profitability and margins on the products, Orascom Oth needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Orascom Telecom: Risks of Internationalization, in the dynamic environment Orascom Oth has struggled to respond to the nimble upstart competition. Orascom Oth has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of Orascom Oth, firm in the HBR case study Orascom Telecom: Risks of Internationalization needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Orascom Telecom: Risks of Internationalization | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Orascom Telecom: Risks of Internationalization are -
Better consumer reach
– The expansion of the 5G network will help Orascom Oth to increase its market reach. Orascom Oth will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Low interest rates
– Even though inflation is raising its head in most developed economies, Orascom Oth can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Orascom Oth can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Orascom Oth in the consumer business. Now Orascom Oth can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Orascom Oth can develop new processes and procedures in Global Business industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Loyalty marketing
– Orascom Oth has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Orascom Oth to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Orascom Oth to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Orascom Oth has opened avenues for new revenue streams for the organization in the industry. This can help Orascom Oth to build a more holistic ecosystem as suggested in the Orascom Telecom: Risks of Internationalization case study. Orascom Oth can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Orascom Oth to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Orascom Oth in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Global Business segment, and it will provide faster access to the consumers.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Orascom Oth can use these opportunities to build new business models that can help the communities that Orascom Oth operates in. Secondly it can use opportunities from government spending in Global Business sector.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Orascom Oth is facing challenges because of the dominance of functional experts in the organization. Orascom Telecom: Risks of Internationalization case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Learning at scale
– Online learning technologies has now opened space for Orascom Oth to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Threats Orascom Telecom: Risks of Internationalization External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Orascom Telecom: Risks of Internationalization are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Orascom Oth in the Global Business industry. The Global Business industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Orascom Oth business can come under increasing regulations regarding data privacy, data security, etc.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Orascom Oth in the Global Business sector and impact the bottomline of the organization.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Orascom Oth.
Stagnating economy with rate increase
– Orascom Oth can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Regulatory challenges
– Orascom Oth needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Global Business industry regulations.
Easy access to finance
– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Orascom Oth can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing wage structure of Orascom Oth
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Orascom Oth.
High dependence on third party suppliers
– Orascom Oth high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Orascom Oth will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Technology acceleration in Forth Industrial Revolution
– Orascom Oth has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Orascom Oth needs to keep up with the evolution of technology in the Global Business sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Orascom Oth needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Orascom Telecom: Risks of Internationalization Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Orascom Telecom: Risks of Internationalization needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Orascom Telecom: Risks of Internationalization is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Orascom Telecom: Risks of Internationalization is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Orascom Telecom: Risks of Internationalization is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Orascom Oth needs to make to build a sustainable competitive advantage.