Saudi Telecom Company (STC) is one of the many companies that have undergone significant organizational change over the last few years. STC is the largest provider of telecommunication services in the Middle East. It has an estimated 29.2 million subscribers, which translates to 71.6 percent of its market share (Raghu, Ramesh & Khanna, 2015). The company currently provides services to its customers through contact centers and online platforms. To survive the fierce competition in the market, the STC has always been determined to keep pace with recent technological trends. It was the first Telco giant to introduce 4G technology in several countries in the Middle East. Over the years, it has successfully penetrated and dominated markets across Asia. The company's internationalization process includes mergers, acquisitions, partnerships and direct investment.
Numerous reasons may influence a company's decision to change its business structures and operational strategies. Among the many, competitive environment, government policy, the emergence of new technologies, prevailing economic conditions, and fluctuations in consumer demand are the most common (Grant & Jordan, 2015). Indeed, recent years have seen information technology innovations alter how businesses operate. Consequently, the emergent new business models have changed how companies handle their consumers and other businesses. Government regulations have also driven firms to change their mode of operations. For instance, the Coronavirus pandemic has forced governments to implement stringent measures, particularly regarding how businesses interact with their consumers. For these reasons, it has become imperative for companies to adapt, failure to which they might be forced to exit the market. STC has not been an exemption to the reasons mentioned above. However, the desire to expand and exploit new markets has been its primary driver.
Investing in new markets is a risky undertaking. It requires companies to have adequate knowledge of all the market's legal framework, environmental requirements, customers' expectations, and cultural differences among others (Grant & Jordan, 2015). It may also be important for the company to map the size of the target market, assess its product segmentation, and evaluate its growth potential. Besides these external factors, internal considerations also come into play. A company that seeks to invest in foreign markets through mergers, partnerships, and acquisitions should have a deep insight into all aspects of local firms. Such knowledge may help it to avoid exposure to invisible risks. STC's acquisition of Kuwait's telecom operator, Viva, exemplifies the importance of these internationalization strategies. In 2015, the company was approved to control a hundred percent of Viva's shares. Soon after striking this deal, the company began changing its organizational structure.
As mentioned above, internationalization allows a company to exploit new opportunities. Mergers and acquisitions, on the other hand, give it a competitive advantage that helps it to survive in the global market. However, success depends on the extent to which the firm can conform to the requirements and needs of the new market. According to different organizational change theories, companies that seek to invest in new markets should reconsider operational routines, social and political factors, conformity to common structures, and characteristics of socio-technical systems (Grant & Jordan, 2015). STC accounts for these factors.
STC employed two strategies to determine the viability of acquiring Viva. First, it analyzed the market dynamics to identify potentially exploitable opportunities. It then initiated the investment process. The company has a specific department that handles all the investment operations, including governance, performance analysis, and strategic assessment (Raghu, Ramesh & Khanna, 2015). The department also explores the most realistic and achievable synergies of acquisition. One such synergy was striking deals with local suppliers. Second, the company embarked on the process of changing its business structures to conform to the needs, demands, and requirements of its new operational environment. Such included taking affirmative action, altering its leadership style, initiating training and development programs, and establishing talent management departments.
STC's success probably stems from its ability to integrate Porter's Five Forces into its change management process. These five forces are critical determinants of almost all aspects of market structures. Competition influences a company's market power. Through the acquisition of Viva, STC was able to gain a considerable competitive advantage over its rivals. The acquisition helped the company to consolidate its strategic positions in the Kuwaiti market. Besides, it also enabled it to keep pace with global trends, especially regarding productivity, efficiency, and standardization. Most importantly, the business deal provided it with synergy for reducing operational costs through economies of scale.
STC's ability to incorporate marketing and branding strategies into its integrated management of operations has posed a barrier to new entrants. One outcome of these strategic trends is the empowerment of customers, especially in Kuwait. Due to the unpredictable expectations of consumers, STC adopted a customer-centric change management strategy that could not be duplicated by its competitors in Kuwait (Al-Aali & Kamel, 2015). To cater to the ever-increasing demands of its customers, STC added other services into its contact centers. These centers provide customers with a 'one-stop-shop' for all their needs. Also, STC is strongly inclined towards improving its human capital. It consolidates its corporate leadership even at international levels. It also offers training opportunities to empower its workforce.
Accommodative leadership can be credited for its successful exploitation of the Kuwaiti market.
After acquiring Viva, STC moved to the next phase of getting stakeholders for its new company. Its major shareholders were customers, employees, suppliers, and other benefactors within the public sectors. Maintaining stakeholders' loyalty is critical. To achieve this, STC ensured that its base management could think, plan, and contribute positively to its new operational objectives. First, it rebranded its operation strategies to reflect the dawn of digital transformation that could enhance its customers' experience (Al-Aali & Kamel, 2015). For example, it changed the newly acquired company from 'Viva Kuwait' to STC. The new branding implied that a 'world-class' provider of digital services and platforms was within their reach. The success of these strategies to boost the company's sale value can be attributed to the effectiveness of broad base management.
Indeed, STC's existing change management strategies are excellent, as exemplified by its successful venture into Kuwait. However, senior management should consider several factors in the future before exploiting new markers. First, it should account for other factors that stimulate industrial growth. Such include globalization and demographic changes. It should also invest in research to ensure that its products and services are innovatively on a par with the current trends. Its change management department should also consider incorporating business intelligence into all its management departments. Although the company has an advanced Supply Chain Management system, business intelligence may further enhance its change strategies, especially when venturing into overseas markets. Lastly, the company should shift its customer-centric focus to other stakeholders. The success of any business does not solely rely on customers. Top-level management should also be ready to listen to its employees. It must look into their affairs by providing them with reasonable remuneration and a favorable workplace environment. Nonetheless, STC is one of the many companies that have excellent change management structures.
References
Al-Aali, A. & Kamel, M. (2015). Saudi Telcom Company. Rapid International Investments and Divestments. JSC, 28(3), 35-55.
Grant, R. & Jordan, J. (2015). Foundation of Strategy. Wiley.
Raghu, M., Ramesh, N., & Khanna, R. (2015). Saudi Telcom Company. Marmore Company Reports.
