SAUDI TELECOM COMPANY

SAUDI TELECOM COMPANY

Introduction

Saudi Telecom Company (STC) was founded in 1998 as a telecommunication corporation in Riyadh, Saudi Arabia. It mainly offers several services like internet services, computer nets, and landline cell phone.STC has, for an extended period, enjoyed monopoly in the telecommunication industry in both the Middle East and North Africa. However, the provision of a license to Etihad Etisalat made STC lose its dominance. According to Alharbi (2019), STC offers primary services such as card Telephones, video streaming, and leased transmission cables. Besides, the company has a total profit amounting to $13.8 billion, with approximately 17,000 workers. The company’s prosperity in diversifying business through strategic execution has seen it grow its fiscal muscles and revenues.

SWOT Analysis of STC

Strengths

STC has several strengths in its operation in the Middle East market. One of the muscles is that STC has created a secure brand value in the Arab marketplace. According to Kadasah (2017), in 2015, STC ranked position 250 in BFG out of the overall 500 positions. Therefore, this added value to the company as the best trademark around the Middle East. Eventually, this strength has helped   STC to increase its markets.

Secondly, STC has a broad market position, precisely in the Middle East. Considering Kadasah (2017), the company’s 4G net covers above seventy-six percent of Saudi Arabia, and it has around $15.83 in profits. Consequently, this makes the company the primary network provider in the entire Middle East.

Additionally, the corporation has extended its dominance in Asian countries like Malaysia. Besides, STC offers a variety of services to its clients; thus, this forms part of its strengths. Some of its functions are data services, cloud encryption, and cell phone, among others. These wide ranges of services have helped the company to reduce its reliance risks.

Weaknesses

One of the weaknesses exhibited by STC is its minimal investment in research and development. In the account of Alharbi (2019), several telecommunication corporations make enormous investments in research and growth programs to promote their development. However, STC’s decreased investment in that sector gives its rivals a competitive advantage. These corporations enjoy the competitive edge in the fact that they continue devoting much of their money in research. Finally, they can launch exceptional products and services in the telecommunication sector.

The other weakness is the fact that STC has hired much of its assets. According to   Alharbi (2019), leased assets attract a fixed monthly or yearly cost. Hence, this expense on the rented assets increases the value of operation for STC.

Opportunities

Saudi Telecommunication Company has several opportunities. Firstly, regarding the current population information, the world population continues to increase (Ghassan, 2019). Therefore, this implies that there is a constant increase in the potential of the telecommunication market. The population increase works to the advantage of STC, and it’s an excellent benefit for the company to advance its sales by taking the opportunity of the advancing number of potential clients.

Secondly, the e-commerce markets serve as an opportunity for the Saudi Telecom Company. Considering, E-commerce is a developing economic area that indicates the tremendous latent of expanding a business to the other level. Thus, corporations might generate revenues through the utilization of e-Commerce. Regarding this fact, several customers do like buying products via the online platform compared to the manual method. Hence, STC stands a tremendous advantage to trigger profits by using the e-commerce platform.

Also, considering Kadasah (2017), the presence of skilled labor as well works to the advantage of Saudi Telecom Company. The opening of several training centers across the globe has made it possible for the increase in the number of skilled workers across the world. On the same note, skilled labor has increased in the nations where STC is operating. As a result, STC has access to qualified personnel, and this would reduce training and growth expenses incurred by the company. Other opportunities include technological growth and social media.

Threats

STC experiences Stiff competition. Generally, there is stiff competition in the telecommunication industry due to the presence of many companies in the market. The rivalry has led to the price decline. Thus, this makes the revenues of STC to reduce to withstand this stiff competition. If the STC does not alter its prices, it will lose its market share.

Competitors’ technological advancement is another threat to the Saudi Telecommunication company. The rivals of STC are adopting and incorporating new technology in producing products and services that are desirable by their customers. Alghamdi (2016) narrates that customers mostly get attracted by a change in technology. Thus, it can lead to a decline in the company’s number of customers.

Also, new entrants pose a threat to STC. Due to free -entry, some new companies are venturing into the industry. These companies continue to gain market share. Therefore, there is a likelihood that STC will lose some of its customers to the new entrants.

Political, Economic, Culture, and Legal challenges that the company faces in Saudi Arabia

Political

The company mostly operates in Saudi Arabia, a country that enjoys political stability. Despite that, Saudi Arabia borders other countries like Iran and Iraq, which experiences political instability. Thus, this makes the company not to run its operations efficiently (Kadasah, 2017). For instance, countries such as Bahrain have promoted some deregulations. These deregulations led to the entry of new rivals into the market. Therefore, political influences have encouraged the substitute goods and services to enter to both Saudi Arabia and other neighboring (Gulf) countries.

Economic

While the projection of the economic growth of its neighboring countries is expected to increase by 1.5%, that of Saudi Arabia is likely to decline by 1.7%. It results from government spending, which has impacted the production of oil negatively. According to Alotaibi (2019), since Saudi Arabia is a developing country that is likely to experience an economic recession. Therefore, that will significantly affect public finance, which will end up in a reduction in customer spending.

Cultural factors

Even if STC is a multinational company, it carries out its operations in Saudi Arabia. Thus, the lifestyle and preferences of its customers control their activities (Al‐Adaileh2011). Since the cultural practices in Saudi Arabia are different from other countries, it poses a challenge when it tries to produce products and services that can suit diverse cultures in different countries.

Legal

Each country has laws in place governing the telecommunication industry. Procedures and policies are the primary legal challenges that STC experiences when terminating contracts. Saudi Arabia laws have got gaps regarding telecommunication due to the quick advancement of technology. Therefore, as a result of insufficient laws governing the industry, the company is likely to face legal dilemmas.

Conclusion

In the telecommunication market, STC continues to do well both locally and globally.It provides vital services such as video streaming, prepaid and post mobile services, 2G, and 3Gamong other services. It enjoys a well-established market, which will make STC survive stiff competition, as shown in the SWOT analysis. Also, it has a great opportunity by taking advantage of the growing population and e-commerce market. Despite that, the company experiences a lot of threats such as stiff competition and advanced technology, among others. Therefore, Saudi Telecom Company should find a new way to cope with economic growth fluctuations of the gulf countries.

References

Al‐Adaileh, R. M., & Al‐Atawi, M. S. (2011). Organizational culture impact on knowledge exchange: Saudi Telecom context. Journal of Knowledge Management.

Alghamdi, A. (2016). The Role of Market Knowledge in the Adoption of the Blue Ocean Strategy and its Impact on Achieving Competitive Advantage: a Study Conducted in the Saudi Telecom Company (STC). Journal of Marketing and HR, 2(1), 55-84.

Alharbi, M., Dowling, P. J., & Bhatti, M. I. (2019). Strategic planning practices in the telecommunications industry: evidence from Saudi Arabia. Review of International Business and Strategy.

Alotaibi, H. J. (2019). Foresightful strategic planning and organizational flexibility in the Saudi telecommunications sector under turbulent economic conditions. International Journal of Advanced Research in Management and Social Sciences, 8(11), 114-134.

Ghassan, H., Alhajhoj, H. R., & Balli, F. (2018). Bi-Demographic Changes and Current Account using SVAR Modeling: Evidence from Saudi Arabia.

Kadasah, N. A. (2017). An Evaluation of Service Quality of a Telecommunication Company in Saudi Arabia using the SERVPERF Scale. International Review of Management and Business Research, 6(1), 162.