Du, a provider of telecommunications, is a second largest company in Dubai. Telecommunication market in Dubai is strongly influenced by resources outside organizations which are an integral part of the chain of activities between the product or service design, through production and marketing to the use of the product or ser¬vice by consumers. Since 1976, it is main competitor Etisalat, was a sole provider on the market. In order to enter the market, “Du” needed materials, skills and finance that were available through co-operation and ownership.
Market Entry For a long time, monopolistic position of Etisalat created high entry barriers. This is because new entrance could not cope with increasingly complex environments from internal resources alone. Du entreated the market as a public joint-stock company. It is main shareholders are Federal Government which owned 40 % of the company, “Mubadala Development Company (20%), Emirates Communications and Technology Company LLC (ECTC) (20%) and public shareholding” (20%)” (AUE at a Glance 2007).
The company entered the market in 2005, “as part of the process of liberalization (AUE at a Glance 2007). The structure of assets allows Du to compete with Etisalat and obtain a strong market position on the Dubai market. Du’s strategy involving equity investments by the partners tend to be more ambitious and often more enduring undertakings. Moreover, firms undertaking this market entry strategy usually have a specific purpose or objective in mind for the partnership (www. du. ae). This strategy is not a common practice for firms engaging but it proposes great opportunities in R&D ventures.
The primary advantage of this strategy is that it allows stakeholders to earn some profits on existing products or technologies without making any significant new investment, either in marketing or production. One of the primary advantages this strategy is that it allows entry into markets otherwise restricted by regulations and competition. Osman Sultan, Du’s chief executive officer admits: “du is breathing new life into the UAE telecom market with a very attractive offering that provides customers with optimum value and convenience” (‘du releases its audited financial results’ 2007). Competition
The innovations and changes have created new opportunities for telecommunication market. From the very beginning, Du is faced with strong competition from Etisalat. In order to avoid price wars and keep its market position, Du Introduces call tariffs similar to that of Etisalat. The main advantage of Du’s strategy is that it brings new capacity and new approaches to serving customer needs. In contrast to its competitor, it proposes innovative telecommunication solutions and better service quality. Etisalat is often criticized for poor and slow internet connection, proxy blocks and high prices.
The advantage of Du is that it “initially rolls out GSM services in metropolitan and commercial zones, while fixed line and broadband service will be introduced at a later date” (AUE at a Glance 2007). Product differentiation strategy is based on the scope for improving scale economies and business efficiency. Generally, those products which lend themselves to a standardized approach are those for which there is a sufficiently large market segment and cultural differences do not impose the need for adaptation (‘du records net pre-operating’ 2007).
Du’s service quality is closely connected with information technology and concepts and methods it employs. A vital element in the group’s organization is its major commitment to infor¬mation technology in all areas of its operations. The product division makes extensive use of on-line data-processing systems in such areas as control of work in progress and stock management, as well as computer-aided design and computer-aided manufacturing.
This extensive use of computers enabled the company to operate efficiently and at the same time enabled the design and product divisions to respond quickly to the needs of customers (‘du records net pre-operating’ 2007). The company creates a value proposition for business market segment. This “value proposition includes Dedicated Account Managers, Fair And Transparent Billing, Business Helpdesk, and Tailored Business Solutions as per the business requirements of a company” (‘du, the new telecommunication operator’, 2007).
Du competes with Etisalat using differentiation strategy achieved as a result of unique product attributes and effective marketing communications. This strategy creates new opportunities for Du to expand in all seven emirates and does not require substantial investments in R&D and advertising. Also, “du mobile services will be available in 85 percent of the populated areas in the UAE” (‘du, the new telecommunication operator’ 2007). Du’s strategy is extremely effec¬tive for defending market position and obtaining above-average finan¬cial returns.
Competition persuades Du to explore various distribution channel alternatives available to the company in an attempt to extend its coverage. Much depends on whether the new system is seen as being innovative. “a tangible gesture from the start on how far du will go for the convenience of it’s customers, du SIM cards will be couriered free of charge to those who confirm and pay for their numbers online” (‘du, the new telecommunication operator’ 2007). At the end of 2006, Du has opened 9 shops and distributed its SIM cards through 90 dealers.
Successful channel management highlights the importance of managing channel relationships well, from the minimization of channel conflict and risk, to the maximization of channel integrity and relevance. Du builds customer value by offering customers both a wider range of channels, and more personalized treatment through the integration of channels. Demand The nature of home demand conditions for the firm’s or industry’s products and services is important because it determines the rate and nature of improvement and innovation by the firms in the nation.
These are the factors that either train firms for competition or that fail to adequately prepare them to compete in the marketplace (‘du releases its audited financial results’ 2007). Du achieves its competitive advantage because the home demand sets the quality standard and gives firms a better picture of buyer needs. This advantage is enhanced when home buyers pressure the nation’s firms to innovate quickly and frequently. Also, “du has set itself the target of acquiring 30 per cent of the UAE market within three years” (‘du, the new telecommunication operator’, 2007).
The basis for advantage is the fact that Du can stay ahead of the market when firms are more sensitive to and more responsive to home demand, and when that demand, in turn, reflects or anticipates world demand. There is less apprehension about investing in large scale production facilities and expensive R;D programs when the home market is sufficient to absorb the increased capacity. In several years, UAE expects rapid demand growth which can reach Dh 950. 9 million in 2008.
Also, Du opens new opportunities for customers offering “171 international roaming destinations” (‘du, the new telecommunication operator’, 2007). In this case, the home demand accurately reflects foreign demand, the existence of large-scale facilities and programs will be an advantage in global competition (www. du. ae). In sum, Du resides in environments marked by fierce competition and market opportunities. On the one hand, it is are open to, and dependent upon, the social and physical environment that surrounds it.
On the other hand, it needs tenancies resources and political legitimacy (a set of laws by which to operate) pro¬vided by outside institutions and governments. Current position of Du suggests that the company will be able to create competitive advantage and increase its sales delivering high quality innovative solutions to the customers. In order to compete on the market, Du has to develop new strategies based on new technological solutions and provisions, improved service operations and customer value propositions.