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Emirates Data Clearing House (EDCH) – strategy assignment

  1. Business Background

This report focuses on Emirates Data Clearing House (EDCH) offer roaming services to

Vodacom a business unit of Etisalat a multinational telecommunication company based in the UAE. The company offers telecommunications services to more than 15 countries in Africa, the Middle East and Asia[1]. Established in 1994, EDCH is one of the leading global clearing houses that offer comprehensive services and solutions to GSM operators from the Middle East, Asia, Europe and Africa.  The main services offered by EDCH include data clearing and financial clearing; value added services and revenue assurance.[2] One the clients of EDCH are Vodacom. EDCH through its parent company Etisalat Telecommunication Corporation made $13.28 Billion in revenue and its entire profit was $2.4 Billion, the EDCH is a major contributor to the profitability and sales of the company[3].

Net Revenue of EDCH compared to the parent company

(in millions $US dollars)

Customer Target

The customer target is Vodacom a telecommunication that operates in 5 African countries[4].  In relation to geographic reach, when Vodacom clients are travelling to UAE, EDCH provides a comprehensive data clearing services. In addition, EDCH offers financial clearing and settlement services for offering GSM roaming accounts between Vodacom and its roaming partners[5]. Other services EDCH offers Vodacom include data pulling systems, file transfer, online reporting and CDR conversion[6].  EDCH has implemented a narrow distribution channel where it has focused on a small segment of consumers who include Vodacom.

 

  1. Current and Desired Position – Core Value Proposition

Currently EDCH is the largest data clearing house in the Middle East with operations in the Middle East, Africa and Europe. It hopes to be leading global roaming solutions provider by 2020[7]. This it strives to achieve through ensuring that it gives its consumers the best services in terms of quality and efficiency.

Figure 1. Spider Graph of Etisalat’s EDCH vs Syniverse vs Tata Communications Value.

The value proposition of EDCH that makes it the best option for Vodacom is because it is the best in terms of pricing. It is also the most reliable of the three competing companies, innovation and above all it ensures that consumers get the best Quality possible when using their services.

  1. Optional tabulations: Current and Desired Marketing P’s, KSF’s

 

Rank Current KSFs Desired KSFs
9 Cost: EDCH has a good pricing mechanism, but this can be improved further through making the prices more competitive than it is currently. Improved Communication: This will result in better communication between EDCH and its clients, this will be better as there will be  better services provided to the customers of Vodacom and other EDCH clients.
6 Competence: Currently the company is competent in its service provision. Through its wide distribution and long history the company is able to deliver on its promises. Global Delivery Capability: The company needs to increase its global foothold to serve a wider market.
9 Knowledge and Competence : The company through innovation has created an important knowledge management framework that is beneficial to the entire organization. Synergies:  The current synergies with its customers need to be strengthened further for the benefit of all.

Marketing Ps

 Business Audit: Value Chain Analysis

 Figure 2. Industry Strategy Canvas

Figure 3. EDCH’s Current Value curve

From the strategy canvas above, EDCH has a competitive advantage over two of its main competitors that is Syniverse and Tata Communications.Competitive advantage that it has is for the short term period as such it needs to look for ways of achieving and maintaining a long-term competitive advantage.

  1. Optional tabulations: Resource & Capability audit; Strength/Weakness vs. Strategic Importance

Resources and capabilities allow an organization to deliver on its objectives .Score Strategic Importance of Resources and Capabilities.

 

Value Element EDCH Syniverse Tata Communications
Cost 8 6 4
Technology 8 6 5
Competence 8 8 6
Process Excellence 8 7 6
Global Delivery Capability 6 6 4
Knowledge and competence 7 6 4
Synergies 7 6 5
Tools and Automation 9 7 6

 

Strengths Biggest clearing business unit in the region

Innovative

Financial strong

Competent human resouces

Technolgical capabilities

Strategically important in achieveing EDCH objectives
Weakness Limited market presence

Slow on innovation

 

Hinders stategic objective of the EDCH

 

R & C Analysis # Strategic Importance (1-Low,

10-High)

Relative Strength (1-Low,

10-High)

Remarks
Resources        
Financial Management C1 8 6 EDCH: Financially healthy As a business unit and the entire group with revenues more than &US 13 billion in the FY 2014, while in the FY 2013 it made more than $US 10 billion.

Syniverse: Shows no signs of recovery as FY2013 reported loss of $US 78 million , and  FY 2014 maqde a further loss of $US 130 Million.

Tata Communications: Relatively stable financially having a profit of more than $US 1 billion in the FY 2013 and 2014.

Remote Services Delivery C2 8 8 EDCH: 5 Global Network Solution Centers
Syniverse : Better GNSC architecture, offer Hot standby redundancy

Tata Communications :Major player in Asia where it has strong growth.

Experiences of Managed Services C3 9 8 EDCH: 156 Contracts, globally
Syniverse:
63 contracts in 2013, 7 contracts in Jan-14

Tata Communications : 20 contracts Major player in Asia where it has strong presence and  growth.

Tools & Automation C5 7 5 EDCH:
• 5 data warehouses globally.
• Over 270,000 trouble tickets resolved
• 185,000 performance reports
Syniverse: Latest technologies used in clearing services.

Tata Communications : Has a fully automated service installed.

Capabilities        
Finance R1 7 4 EDCH: Enjoying the best financial health coupled with increased sales and profits.

Syniverse:facing  financial turmoil due to increased losses.

Tata Communications: Investing heavily thanks to increased growth and new market opportunities.

Human Resources R2 8 7 EDCH: 10,000 employees 
Syniverse:
3,000 employees

Tata Communications: 6,000 employees.

Global Network Solution Centers R3 7 8 EDCH: 500 million customers served  
Syniverse:
130 million customers served.

Tata Communications: 250 million customers.

Access to global knowledge R4 7 7 NSN: 1.5 million network elements managed, 380 MS Contract worldwide
Ericsson:  300 MS Contracts worldwide
Geographical Presence R5 6 7 EDCH: Present in the Middle East , Far East ,Africa and Europe.
Syniverse:
Serves North America, Central and South America.

Tata Communications: Mainly in Asia.

Synergy with services R6 6 5 EDCH:
• 3rd largest data clearing house in the world.
•The only data clearing house in the middle East.

Syniverse : Continuous divestment is reducing the synergy.

 

 

 

  1. With the operating model described find improvement opportunities

 

 

.

 

 

Improvement Details Strategic importance (1 to 10)
Technology and Innovation Innovation helps companies offer their clients better services while also acquiring competiotive advanatge over its rivals[8]. Vodacom as a a customer of EDCH stands to benefit from the development of innovation within EDCH. EDCH will loss its competitiveness unless it creates new innovations and it also risks losing its valuable customers such as Vodacom. EDCH needs to invest more in innovation because it is offering technological services that require regular advancement/updates 8

 

 

 

 

 

 

 

Synergies EDCH offers companies synergies through helping with data clearing services as such Vodacom can focus solely on its main services which are providing voice and data services tto its consumers. Through synergy created between the two companies vodacom can access simplified GSM roaming, better utilization of its  available resources and improved profitability.

EDCH needs to ensure that its services create improved synergy for its clients like Vodacom for better prospect and future.

 

7
Competence EDCH is highly competent in what it does having been in operation for more than 20 years it is a leader in data clearing services as such Vodacom  will benefit from such experience and competence.

Through promising further improvement oin services and delivering on that promise EDCH can be able to acquire and maintain new customers and current such as Vodacom.

8
Process Excellence Process Excellence is an important aspect in driving customer satisfaction and creating a strong customer relationship. Therefore, EDCH needs to maintain and deliver on Process Excellence to increase its competitive advanatege. Process Excellence is key in getting new customers and keeping those who currently exists,when a businesses process is not excellent  it will lose its market share[9]. This underlines the importance of focusing on improving such.

 

8
Global delivery capability EDCH provides highly technlogical services of comprehensive data clearing services. EDCH offers financial clearing and settlement services for offering GSM roaming accounts. Accordingly, EDCH needs to continuously advance it telecommunication technologies to increase its efficiencies and meet any new needs of Vodacom.  Improved technology will as well enable EDCH  to  improve its quality on the services that it provdes to Vodacom. It will as well increase the value proposition it offers in addition to Global delivery of the services offered by Vodacom. 8
Cost EDCH offers more competitive price compared to its competitors. This is benefiucial to Vodacom as it is able to render good services at a reasonable cost .However, EDCH needs to  ensure that the pricing of its services remains competitive because its one of the affects that are considered by its clients like Vodacome before choosing it. 8
Knowledge and competence EDCH has over the many years of operation developed knowledge and competence that can be seen in its innovative services, this allows its customers such as Vodacom to benefit from better services , however, there is need to improve on its innovation and knowledge generation nwhich is a critical survival aspect. 7
Tool and Automation This helps reduce the use of humaqn resources to monitor critical company infrastructure and processes as such better benefits acrues to customers due to reduced costy of manpower and better automated services. Though relatively better it can be improved further to meet various customer needs that are forever changing. 9

 

  1. Management Agenda to enhance position

Increase the marketing of EDCH is important as it will help meet the company’s agenda which is increasing its customer base by around 15%.This will take one year and it will involve spending some money on various advertising media such as newspaper, television among other media. This will help the company to maintain its customer base and also acquire more new customers. Limited marketing by EDCH on its products is not beneficial to the business as it is not getting new customers, this will hinder its long term growth strategy.

EDCH should seek ways of maintaining its competitive edge over its main rivals, there are points that the company needs improvement, this is because on some fronts it is stronger than its competitors and weaker on some aspects. When EDCH maintains its competitive advantage such would trickle down to Vodacom which is among its clients .Vodacom will also reap from better services provided by the company. Competitive advantage can be achieved by improving on its pricing which when reduced, Vodacom can also afford its consumers cheaper prices and this will result in improved sales and revenues. Pricing can be achieved through investing on new infrastructure this should take around 18 months.

 

Improve on how it relates with Vodacom. This calls for encouraging better relationships between the company and Vodacom. EDCH should create a good relationship between it and Vodacom, this will encourage better communication, stability and improved revenues, and improved communication comes with better service delivery to Vodacom and its eventual clients.

Reduced customer complaints are integral in ensuring that the clients of Vodacom are satisfied with the services provided by the company. Through reducing those complaints in half there will be more satisfied customers and better .This can be achieved between 18 months and two years, and it should cost the company $5,000,000 per year in undertaking upgrades and improvement of infrastructure. Currently there are a number of complaints from the clients regarding the services offered by the company. And this can be improved through investing in better infrastructure with less downtime.

Improve on data and financial clearing services of Vodacom, as more people are adopting mobile data , the number of clients using EDCH services is bound to increase. This increased number of Vodacom users will result in need for more and better infrastructure as such EDCH will need to improve on its Data and financial clearing services. This will help increase the speed consumers will be accessing data resources and as a result there will be more satisfied customers .When this is achieved the efficiency of the data transfer services will be increased by more than 10%. This should take between 6 months and a year. The main infrastructure that could be improved is GRX systems and roaming replicator.

Innovation by EDCH will result in Vodacom having improved services, this calls for EDCH increasing its R&D investments and also the number of new innovations that are ready to be adopted by the industry .This will result in the consumers of Vodacom enjoying better services and the company increased revenue. This can be achieved in 24 months, through increasing the money that is set aside for investment.

 

 

Objectives Tasks Success Criteria Time Frame Cost & Resources Note
Marketing EDCH business unit. Increasing the marketing and advertising of the EDCH within UAE. Increased Customer base by 15%. 12 Months cost estimation:  $100,000/month Limited marketing by EDCH on the products and services it offers.
Maintaining its competitive advantage over its competitors where possible. Among the areas that require new focus and direction is the matter of pricing, EDCH should strive to offer competitive pricing to all its services it provides

.

Leading in all aspects that measure the competitive edge of the company. 18 Months $ 800,000/ Year to improve the weaknesses. Currently the competitors may seek to invest in their weaknesses so as to catch up with EDCH.
Improve relationship with clients. There is need to encourage good relationship of the EDCH with Vodacom and other major customers, this will encourage effective communication between it and its clientele as a result there will be better service delivery. In addition, it will increase the level of customer satisfaction Reduced customer complaints by more than 50% in the new year. 18-24 months $5,000,000 /year to improve on the existing infrastructure Currently there are a number of complaints from the clients regarding the services offered by the company.
Improve on data and financial clearing services With increase in mobile data usage, EDCH is bound to see the number of clients increasing on its infrastructure. Therefore, it needs to ensure that it increases the speed of its data transfer This will increase efficiency of its data transfer services by 10% 6-12 months $500,000 Need to move to GRX system and roaming replicator.
Innovation Increasing the capacity of the R&D department and also the number of enterprise ready innovations that the company produces. Launching 2 new services and service improvements to serve customers better and cheaper than currently is. 24 months $1,000,000/

year

The money used for innovation is limited.

 

 

  1. Business Linkages internally and the ecosystem

 

EDCH need to strengthen its internal linkages with Vodacom its customer relationship . Accordingly, we suggest that it should strengthen its distribution services. As clearly pointed out by David Anderson et al, distribution network is the foundation of the business operation, and it affects every aspect of the company[10].  EDCH will strengthen its distribution services by monitoring cash flows, establishing information conduits and by tracking its inventory.  In addition, the EDCH needs to ensure that it meets the needs of Vodacom’s distribution strategy. These measures will increase the efficiency of distribution services of both Vodacom and EDCH.

One ecosystem linkage that EDCH needs to strengthen is partnerships with Vodacom and other clients. Partners can greatly benefit a business in various ways that include financial support and widening organizational competencies[11]. EDCH will achieve this by determining common ground with its partners. Secondly, EDCH has to recognize the contributions made by its partners towards its business activities. Thirdly, provide for a win-win situation with its partners. Fourthly, EDCH needs to fairly treat Vodacom. Lastly, EDCH has to clarify the functional roles of its partners. These steps will greatly strengthen the relationship with its partners.

 

Business Flow
Logistics

Through high speed broadband connections and satellite the company has improved service delivery

Product Distribution

·        Efficient supply chain.

·        On time service provision.

·        Reliable services

Brand Identification

Increase market of the product in reach and number of customers.

Sustainability

Ensures less energy consumption and reduced business costs.

Innovation

New technologies for data clearing services.

 

 

 

Activity Linkages to Other Business Activities
Marketing Sales

Create brand awareness

Outbound Logistics

Flexible for domestic and International markets.

Operations

Running up of organization affairs.

Inbound Logistics

Access to equipments and infrastructure

Distribution Network-External Linkage

Create vibrant partnerships and synergies between organizations

Services

Support marketing awareness campaign

Sustainability-External Linkage

·        Monitor supply of equipments

·        Operational audits

·        Sustainability Report.

 

Secondary Activities (Firm , HR ,Technology ,Procurement)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

T + 4

2020

T + 3

2019

T + 2

2018

T + 1

2017

T

2016

T-1

Launching 2 new services and service improvements to serve customers better and cheaper.
Reduced customer complaints by more than 50% .
Leading in all aspects that measure the competitive edge of the company.
Increased Customer base by 15%.
Increase market of EDCH and be leading global roaming solutions provider by 2020

2015

 

 

 

Bibliography

Anderson, D., Britt, F and Favre, D: (2007). The seven Principles of Supply chain management. supply Chain Management Review, 41-46

EDCH (2015) Etisalat and EDCH enter into reseller agreement on Signaling, GRX and Roaming Replicator . Retrieved from. http://www.edch.com/dev/news-events/59-etisalat-and-edch-enter-into-reseller-agreement-on-signaling-grx-and-roaming-replicator

El Gazzar ,Shereen, ‘UAE consumers able to choose between Etisalat and du internet this year’  <http://www.thenational.ae/business/telecoms/uae-consumers-able-to-choose-between-etisalat-and-du-internet-this-year> accessed 15 August 2015.

El-Darwiche B, Hall S and Friedrich R, (2015) Telecommunications Trends’ (Strategyand.pwc.com, 2015) <http://www.strategyand.pwc.com/perspectives/2015-telecommunications-trends> accessed 14 August 2015

Etisalat , ‘About Etisalat’ <http://www.etisalat.ae/> accessed 15 August 2015

Etisalat Services  ,’Emirates Data Clearing Services’, (etisalatservices .ae, 2015) <http://www.etisalatservices.ae/emirates_data_clearing_house.html 2013>accessed 15 August 2015

Mckeown, M (2012). The Strategy Book, FT Prentice Hall.

Mulcaster, W.R.(2009)/ Three Strategic Frameworks, Business Strategy Series, Vol 10, No 1, pp 68 – 75

[1]                  Etisalat, 2015

[2]                  http://www.etisalatservices.ae/emirates_data_clearing_house.html

[3]        Etisalat, 2015

[4]                  http://www.vodacom.com/about-us/home

[5]                  EDCH (2015)

[6]                  Etisalat , 2014

[7]                  Etisalat ,2013

[8]                  Mulcaster, W.R.(2009)

 

[9]                  Mckeown, M (2012). The Strategy Book, FT Prentice Hall.

[10]                Anderson, Britt and Favre (2007)

[11]                Mckeown (2012).

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