Share a current event from the news that embodies one of the topics we have discussed in class this semester.
Does this real world situation change your understanding of the topic in any way?
What is the importance of this current event?
Vodafone In Egypt
Market Entry and Development
Vodafone expanded into Egypt in 1998 as the second mobile telecom operator by buying a minority (30%) stake in the MisrFone Group.b As part of the liberalization of the Egyptian telecom market that began in 1999, MisrFone Group became the second operator to be awarded a license for GSM operations in Egypt, which it began to run under the name of Click GSM. Initially, these operations were in the form of a consortium among Vodafone International, AirTouch, and local/international partners. In 1999, Vodafone Group acquired the AirTouch share and, in 2002, that of Vivendi of France. In January 2002, Click GSM was rebranded Vodafone Egypt.
In early 2005, in a promising move to establish a level playing field and facilitate competition, the Ministry of Communications and Information Technology (MCIT) and the NTRA of Egypt launched the Universal Service Fund (USF). The USF aimed to finance the expansion of unprofitable services into remote areas of Egypt and subsidize the provision of services in low-income areas through contributions, which all telecom companies in Egypt were obliged to make.16 Vodafone Egypt agreed to pay 0.5 percent of its revenues into the USF.17
16EIU Economist Intelligence Unit Egypt Telecoms Update, January 2011.
17Vodafone Group PLC, “Annual Report” (2010), p. 135.
In 2006, Vodafone Egypt launched off-shore operations under the name of Vodafone International Services. This subsidiary was dedicated to outsourcing business processes and IT services for Vodafone operators and beyond. Both its business-process outsourcing (BPO) and information technology outsourcing units grew successfully in the subsequent years. By 2010, they employed over 2,200 staff, speaking 10 different languages, to provide customer and technical support for customers in 80 countries. To complement its wide set of voice and mobile Internet services, Vodafone Egypt acquired a 51 percent controlling stake in Egypt’s Raya Telecom in October 2006.18 Raya was a leading data operator in Egypt, with a modern network infrastructure serving domestic and international, corporate, and consumer segments. To strengthen its Internet-based services, Vodafone Egypt acquired Sarmady Communications in August 2008. Sarmady had grown steadily since its establishment in 2001, to dominate some of the Arab world’s most popular Internet content services, such as ContactCars.com, FilBalad.com, FilFan.com, and FilGoal.com.19 Sarmady became the digital arm delivering the Vodafone Internet experience in Egypt, putting Vodafone Egypt at the forefront of data innovation in the market. In 2007, Hatem Dowidar took over as CEO of Vodafone Egypt. In early 2011, Vodafone Egypt’s executive team comprised nine members, two of whom—Marwa El Ayouti, the chief financial officer, and Dalia El Gezery, the human resources director—were women. Tony Dolton, the chief technology officer, was the only non-Arabic director, though all members of the executive team had international experience in terms of higher education and/or work experience (see Exhibit 2). Of the 470 management positions, 82 (17%) were occupied by women, whereas there were 1,450 women (33%) in the total workforce of 4,360.20 Vodafone Egypt’s shareholder structure consisted of Vodafone Group (54.93%), state-owned Telecom Egypt (44.94%), and a minority free float (0.13 %).
ALSO PLEASE REPLY 2 OF MY PEERS COMMENT:
Recently, Forever 21, a fashion giant based in the United States, announced to shut its online units in China; meanwhile, the retailer has been conducting clearance sales in its brick-and-mortar outlets. Put simply, Forever 21 failed in China.
Explanations to the retailer’s failure are multisided, but inadequate understanding about institutional challenges is the main one. In online space, Alibaba and JD.com are the two dominant platforms with joining market share of 70% (Howland, 2019). To any other retailers, the room for growth is truly limited. In addition, Chinese consumers are no longer price-oriented as they used to be, owing to a rapid growth of national economy. Their concern has shifted from prices to high-quality, fashionable, trendy products. What is more, they are after well-crafted user experience. In the absence of market research, Forever 21 consistently delivers low-priced apparels that are not as appealing as other fast-fashion brands’. By comparison, Zara, UNIQLO, H&M and GAP have respective service strategies to enhance people’s shopping experience (Zhang, 2019). Poor knowledge about consumer culture as well as social change proceeded to the American’s failure. A simply example refers to its over-sized offers that does not match Chinese consumers’ physical size.
Apparently, Forever 21 sought to replicate its successful formula in China in order to achieve another high. However, a major weakness identified from its business decision is the miscalculation of psychic distance which, in international business, refers to different beliefs, values, and attitudes arising out of cultural disparity (Smith et al., 2011). The American Retailer perhaps was overconfident its Chinese initiatives thereby failing to account the significance of sociocultural trends in China. Therefore, an invaluable implication distilled from this case is knowing the changing environment. A multinational enterprise (MNE) is expected to conduct sufficient research work for risk mitigation.