Strategic Analysis: Saudi Telecom Company Business Strategies

This report provides a comprehensive strategic analysis of Saudi Telecom Company (STC), examining its business-level and functional strategies. The analysis covers various aspects, including market development, product strategy, pricing and distribution, financial strategy (cash flow planning, equity financing, dividends, and stock buyback), research and development (R&D) strategy, operations strategy, logistics, human resource management (HRM), and outsourcing/offshoring strategies. The report identifies the strategies employed by STC, such as market and product development, penetration pricing, and extensive distribution. It further explores the financial strategies, including equity-based financing and dividend policies. The R&D strategy focuses on new service development and technological leadership, while the operations strategy emphasizes a customer-driven approach. The report also discusses the company's logistics, HRM, and outsourcing strategies. Finally, the report provides recommendations to enhance STC's future prospects in the competitive telecommunications market.

Running head: STRATEGIC MANAGEMENT
Strategic management
Name of the student
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Executive summary
The aim of this report is to discuss about the business level strategies and functional strategies
being followed by Saudi Telecom Company. All the relevant strategies being followed by them
are being identified and analyzed in this report. It is identified that even though the existing
strategies of Saudi Telecom Company are well effective but there are few gaps. On the basis of
these gaps, this report has discussed a few recommended steps that can help Saudi Telecom
Company to ensure their future opportunities in the long term.

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Table of Contents
Introduction......................................................................................................................................3
Market development strategy..........................................................................................................4
Product strategy...........................................................................................................................5
Pricing and distribution strategy..................................................................................................5
Financial strategy of Saudi Telecom Company...............................................................................6
Research and development strategy.................................................................................................8
Operation strategy of Saudi Telecom Company..............................................................................9
Logistics strategy of Saudi Telecom Company...............................................................................9
HRM strategy of Saudi Telecom Company...................................................................................10
Outsourcing / off shoring strategy of Saudi Telecom Company...................................................10
IT strategy of Saudi Telecom Company........................................................................................11
Recommendations..........................................................................................................................11
Conclusion.....................................................................................................................................13
Reference.......................................................................................................................................14

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Introduction
The current business scenario is much more challenging than it was a few years ago. This
is due to the reason that competition is higher in the recent time and it is ever increasing. Thus,
the market followers should have innovative strategy to get over the market leaders and the
market leaders should have competent strategy to immune themselves from the threat of others.
These strategies include the marketing strategy to IT strategy1. Hence, the company should be
competent enough from different aspects to be effective in the current business scenario. From
the context of the Saudi Arabia, telecom sector is one of intensely competitive market. This is
due to the presence of number of brands in the sector and Saudi Telecom Company is the current
market leader. They are also only the integrated telecom operator in the country with offering
their diversified service portfolio to the customers. However, it is also important for them to
review the current strategic intent of them in order to have the understanding about their
effectiveness in dealing with the competition2.
This report will discuss about the different strategies being followed by Saudi Telecom
Company and the extent to which they are effective enough in dealing with the market factors.
Different other determining strategies, which are relevant for these strategies will also be
discussed. On the basis of the gap areas to be identified, this report will state a few recommended
steps that will further help Saudi Telecom Company to enhance their future probabilities.
1 Bharadwaj, Anandhi, et al. "Digital business strategy: toward a next generation of insights." MIS quarterly (2013):
471-482.
2 Oestreicher-Singer, Gal, and Lior Zalmanson. "Content or community? A digital business strategy for content
providers in the social age." MIS quarterly (2013): 591-616.

4STRATEGIC MANAGEMENT
Market development strategy
It is identified that Saudi Telecom Company is following the market development as well
as product development strategy. This is due to the reason that in term of the product
development strategy, Saudi Telecom Company is introducing digital contents, financial services
and other forms of information technology to the business clients. It is also stated by the CEO of
Saudi Telecom Company that these new services are designed for the national region and not for
the foreign markets3. Hence, it can be concluded that Saudi Telecom Company is following
product development strategy by means of offering different services to the existing market. On
the other hand, in terms of market development strategy, Saudi Telecom Company is following
the merger and acquisition route as it is reported that they have acquired different operations in
nine countries across the world. Saudi Telecom Company has acquired investment holding
companies such as Binariang of Malaysia and through it they are having stock of different
companies such Maxis from Malaysia, Aircel from India and Axis from Indonesia. With the help
of this strategy, Saudi Telecom Company is offering the same telecommunication services to
different foreign markets4. Henceforth, it can be concluded that both the market development and
product development strategies are being followed by Saudi Telecom Company in their business
operation.
It can also be concluded that market penetration strategy is being followed by the Saudi
Telecom Company due to the reason that the newer services being initiated by them are centered
towards the national market of Saudi Arabia only. Thus, the more will be the new services in the
market, the more will be the market penetration for Saudi Telecom Company across different
3 Newberry, Susan. "Public sector reforms and sovereign debt management: Capital market development as
strategy?." Critical Perspectives on Accounting 27 (2015): 101-117.
4 Kang, Wooseong, and Mitzi Montoya. "The impact of product portfolio strategy on financial performance: The
roles of product development and market entry decisions." Journal of Product Innovation Management 31.3 (2014):
516-534.

5STRATEGIC MANAGEMENT
customer segments. They are focused on market push factors where Saudi Telecom Company is
investing customer awareness program and promotional campaigns. This is due to the reason that
there are number of telecom companies operating in the country and the market is already
saturated5. Thus, the customers are no more get attracted by the pull factors rather they can only
be attracted by the push factors.
Product strategy
It is identified that Saudi Telecom Company is focused on extending their brands due to
the reason that traditional telecommunication service is in the matured stage of the service life
cycle and there are no new opportunities left. Thus, they are initiating brand extension under
which newer services such as online payment system in the market6. This is helping Saudi
Telecom Company to extend their brand identity across different services and catering to larger
customer segments. It should also be noted that extending the brand is beneficial for Saudi
Telecom Company in adjusting the risks associated with the diminishing life cycle of the
traditional telecom services.
Pricing and distribution strategy
In terms of the pricing strategy, Saudi Telecom Company is following penetration
pricing. This is due to the reason that Saudi Telecom Company is having major shareholder as
the government of Saudi Arabia7. Thus, social objective of covering the entire region with the
telecommunication services is given more preferences over others. In this case, they are offering
5 Sibirskaya, Elena, et al. "Strategy of systemic development of entrepreneurial infrastructure of regional
economy." European Research Studies 18.3 (2015): 239.
6 Li, Bo, et al. "Pricing strategy and coordination in a dual channel supply chain with a risk-averse
retailer." International Journal of Production Economics 178 (2016): 154-168.
7 Danziger, Shai, Liat Hadar, and Vicki G. Morwitz. "Retailer pricing strategy and consumer choice under price
uncertainty." Journal of Consumer Research 41.3 (2014): 761-774.

6STRATEGIC MANAGEMENT
competitive pricing strategy under the penetration pricing strategy and it is helping in catering to
the market across different income level of the customers. In terms of distribution strategy,
extensive distribution strategy is being followed by Saudi Telecom Company in line to their
market penetration strategy8. This is due to the reason that with the help of the extensive
distribution strategy, availability of the services is more and penetrated in the market. This is
ensuring that the services of Saudi Telecom Company are well covered in the country.
Figure: 1
Shareholders of Saudi Telecom Company
Source: Created by author
Financial strategy of Saudi Telecom Company
It is identified that Saudi Telecom Company is following cash flow financial planning.
This refers to the forecasting of short term and long term expenses and initiates the cash flow
accordingly. Even though this strategy is well effective for Saudi Telecom Company considering
8 Kienzler, Mario, and Christian Kowalkowski. "Pricing strategy: A review of 22 years of marketing
research." Journal of Business Research 78 (2017): 101-110.

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their stable financial environments in the country but they will face challenges in the case of
economic slowdowns and other unwarranted incidents. Moreover, it should also be noted that
cash flow planning involved higher risks and they will cause insolvency in case of inaccurate
forecasting. It is identified that Saudi Telecom Company is following equity based financing due
to the reason that are publicly traded company and is gaining capital from IPO. Prior to 2002,
they were followed debt financing9. It is reported that Saudi Telecom Company is using
dividends in terms of achieving the stock price appreciation. It is witnessed that the dividend
yield for Saudi Telecom Company is increasing and estimated data shows that it will go over 4
percent as of 2014.
Figure: 2
Dividend yield results of Saudi Telecom Company
Source: Created by author
9 Butler, Alexander W., Michael O'Connor Keefe, and Robert Kieschnick. "Robust determinants of IPO
underpricing and their implications for IPO research." Journal of Corporate Finance 27 (2014): 367-383.

8STRATEGIC MANAGEMENT
It should be noted that Saudi Telecom Company will not be benefited from the LBO due
to the reason that selling of the assets and stocks will gain capital but it will also reduce the
market presence of them in both international as well as national market. However stock
buyback can be an beneficial option for Saudi Telecom Company due to the reason that initiation
of the stock buyback during the stable environment will enable them to reissue the stocks again
in the market in much higher premium10. Moreover, this higher premium will also attract
investors due to the enhanced position of the entity and thus the accumulation of the capital will
be more. On the other hand, stock splits can also be beneficial due to the involvement of fewer
risks. This is due to the reason that with the help of the stock splits, the existing shareholders will
be given the new shares according to their current holdings. Thus, the involved risks will be less
for due to the trustworthiness of the existing shareholders11.
Research and development strategy
One of the major R&D strategies being followed by Saudi Telecom Company is new
service development. This is due to the reason that there are number of new services being
introduced in the market by them and this is helping them to cater to the unexploited market. In
addition, the demand and market trends are changing frequently and according to these changes
Saudi Telecom Company is initiating the new services. For instance, in the initial stage, the
service offerings of them include the traditional telecommunications, which further increased in
to internet and financial offerings12. This strategy is helping them in coping up with the changes
10 Shi, Charles, Kuntara Pukthuanthong, and Thomas Walker. "Does disclosure regulation work? Evidence from
international IPO markets." Contemporary Accounting Research 30.1 (2013): 356-387.
11 Cai, Kelly Nianyun, Xiaoquan Jiang, and Hei Wai Lee. "Debt IPO waves, investor sentiment, market conditions,
and issue quality." Journal of Financial Research 36.4 (2013): 435-452.
12 Patel, Pankaj C., and James J. Chrisman. "Risk abatement as a strategy for R&D investments in family
firms." Strategic Management Journal 35.4 (2014): 617-627.

9STRATEGIC MANAGEMENT
in the market. Thus, it can also be concluded that Saudi Telecom Company is more focused on
exploitation. They are striving for technological leadership due to the reason that Saudi Telecom
Company is planning to start the 5G services in Saudi Arabia and they will be first service
provider to offer the 5G services across the country13. They are using open innovation due to the
reason that they are not offering any disruptive innovation in the market rather common
innovations.
Operation strategy of Saudi Telecom Company
In terms of the operations strategy, Saudi Telecom Company is following this customer
driven approach in order to have more effective penetration in the market. This refers to the
strategy of designing the operational policies according to the market trends. Thus, the auxiliary
services of Saudi Telecom Company are also well centered with the customers. However, it
should be noted that sourcing strategy is not applicable for them due to them due to the reason
that they are offering telecommunication services, which are not having the requirements for
sourcing of materials14.
Logistics strategy of Saudi Telecom Company
The logistics strategy of Saudi Telecom Company is also not applicable due to the reason
that they are offering telecommunication and internet services, which do not involve
transportation of physical goods and thus no logistic is required in the process. However, the
service delivery process is important for them in managing the satisfaction level of the
customers. With the help of the modern technologies and internet, this delivery process for Saudi
13 Wuyts, Stefan, and Shantanu Dutta. "Benefiting from alliance portfolio diversity: The role of past internal
knowledge creation strategy." Journal of Management 40.6 (2014): 1653-1674.
14 Costa, Andrea, et al. "Building operation and energy performance: Monitoring, analysis and optimisation
toolkit." Applied Energy 101 (2013): 310-316.

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Telecom Company is getting further enhanced due to the reason that modern technologies such
as automation and artificial intelligence is increasing the efficiency of the customer services and
reducing the chances of error15. Moreover, internet services are also helping them in offering the
services to the customers at minimal time and in most accurate manner.
HRM strategy of Saudi Telecom Company
In terms of the human resource management strategy, Saudi Telecom Company is
following cost leadership strategy. This is also in the line of their market penetration approach
due to reason that the cost leadership approach is helping in having regulated cost in the internal
process and reduction in the average cost of operation16. The human resource management
approach of Saudi Telecom Company is centered towards achieving the maximum productivity
from the employees and increasing their average rate of production. As of now, they do not have
self managed teams as there are managerial levels in the workplace. In addition, the hierarchical
orders are being followed in the workplace.
Outsourcing / off shoring strategy of Saudi Telecom Company
In terms of the outsourcing strategy, Saudi Telecom Company is having vertical
integration due to the reason that customer care services of them are being managed by the
outsourced third party vendors. This is due to the reason that outsourced third party vendors are
more experienced in offering the customer services over the Saudi Telecom Company.
Moreover, Saudi Telecom Company is also gaining cost effectiveness in outsourcing their
15 Jahre, Marianne, and Nathalie Fabbe-Costes. "How standards and modularity can improve humanitarian supply
chain responsiveness: The case of emergency response units." Journal of Humanitarian Logistics and Supply Chain
Management 5.3 (2015): 348-386.
16 Jackson, Susan E., Randall S. Schuler, and Kaifeng Jiang. "An aspirational framework for strategic human
resource management." The Academy of Management Annals 8.1 (2014): 1-56.

11STRATEGIC MANAGEMENT
customer service process. According to the transaction cost economics, the cost of outsourcing
for Saudi Telecom Company is the price being paid to the third party vendors for the services17.
However, the cost of transactions is low compared to the providence of the service in-house.
Hence, Saudi Telecom Company is gaining in terms of the opportunity costs.
IT strategy of Saudi Telecom Company
The information technology strategy of Saudi Telecom Company involves first mover
approach in order to gain the advantage of the untapped market. For example, introduction of the
5G services in the country is a first mover strategy and this will help Saudi Telecom Company to
have the untapped market in Saudi Arabia. Hence, in line to the first mover strategy, Saudi
Telecom Company is initiating continuous innovation process in coping up with the changes in
the market. However, they are not using the follow the sun management due to the reason that
their operations in different countries are working as strategic business units and standardization
is not being followed. Moreover, due to the presence of strategic business units in different
countries, the management process of Saudi Telecom Company is also not centralized and thus
communication for the flow of information between the different operations is not important for
them.
Recommendations
 It is recommended that Saudi Telecom Company should also follow diversification
strategy as being done by some of their global competitors. This will further reduce the
dependability from the telecommunication sector. Diversification for Saudi Telecom
Company can include the hardware segments apart from their existing software segment.
17 Dutta, Dev K., Kholekile L. Gwebu, and Jing Wang. "Strategy and vendor selection in IT outsourcing: is there a
method in the madness?." Global sourcing of services: Strategies, issues and challenges. 2017. 451-477.

12STRATEGIC MANAGEMENT
This will help them to cater to larger target segments apart from their existing markets. In
addition, initiation of the diversification strategy by Saudi Telecom Company will also
increase their brand identity and value across the globe and can be effective in enhancing
their worldwide presence.
 In terms of the research and development strategy, it is recommended that Saudi Telecom
Company should also follow exploration approach. This is due to the reason that
exploration approach will help Saudi Telecom Company to have the understanding about
the popular trends in the market and the competitiveness of the competing firms.
According to these trends, few strategies can be initiated by Saudi Telecom Company,
which can prove successful.
 It is also recommended that Saudi Telecom Company should follow differentiation
strategy in terms of their human resource management strategy. This is due to the reason
that the existing cost leadership strategy is helping them to have the lower cost of
operation. However, with the help of the differentiation strategy, distinctiveness can be
gained by them and this will also increase the competitiveness for them. With the help of
the differentiation strategy, the services will be distinctive as compared to the competitors
and will offer more value proposition for the customers.
 The information technology being followed by Saudi Telecom Company should not act
as the substitute of the manual employees rather it should be positioned as the
complementary. This is due to the reason that initiation of automation may reduce the
applicability of manual labor. However, effectiveness of the manual labor is also
important in the firm competitiveness. Thus, it is recommended that the information

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technology of Saudi Telecom Company should be designed in such as way that it will
enhance the effectiveness of the existing employees.
Conclusion
This can be concluded that the functional and business level strategies of Saudi Telecom
Company are well effective and they are helping in maintaining their position in the market.
However, still there are few gaps being identified in this report on the basis of their existing
strategies. These strategies should be enhanced in order to gain the long term viability in their
business operation. This report has discussed about a few recommended strategies that will
mitigate the identified gaps and will ensure the long term viability for Saudi Telecom Company.
It is expected that the effective implementation of the recommended steps in this report will
ensure that Saudi Telecom Company is gaining more opportunities in the long term.

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Reference
Bharadwaj, Anandhi, et al. "Digital business strategy: toward a next generation of insights." MIS
quarterly (2013): 471-482.
Butler, Alexander W., Michael O'Connor Keefe, and Robert Kieschnick. "Robust determinants
of IPO underpricing and their implications for IPO research." Journal of Corporate Finance 27
(2014): 367-383.
Cai, Kelly Nianyun, Xiaoquan Jiang, and Hei Wai Lee. "Debt IPO waves, investor sentiment,
market conditions, and issue quality." Journal of Financial Research 36.4 (2013): 435-452.
Costa, Andrea, et al. "Building operation and energy performance: Monitoring, analysis and
optimisation toolkit." Applied Energy 101 (2013): 310-316.
Danziger, Shai, Liat Hadar, and Vicki G. Morwitz. "Retailer pricing strategy and consumer
choice under price uncertainty." Journal of Consumer Research 41.3 (2014): 761-774.
Dutta, Dev K., Kholekile L. Gwebu, and Jing Wang. "Strategy and vendor selection in IT
outsourcing: is there a method in the madness?." Global sourcing of services: Strategies, issues
and challenges. 2017. 451-477.
Jackson, Susan E., Randall S. Schuler, and Kaifeng Jiang. "An aspirational framework for
strategic human resource management." The Academy of Management Annals 8.1 (2014): 1-56.
Jahre, Marianne, and Nathalie Fabbe-Costes. "How standards and modularity can improve
humanitarian supply chain responsiveness: The case of emergency response units." Journal of
Humanitarian Logistics and Supply Chain Management 5.3 (2015): 348-386.

15STRATEGIC MANAGEMENT
Kang, Wooseong, and Mitzi Montoya. "The impact of product portfolio strategy on financial
performance: The roles of product development and market entry decisions." Journal of Product
Innovation Management 31.3 (2014): 516-534.
Kienzler, Mario, and Christian Kowalkowski. "Pricing strategy: A review of 22 years of
marketing research." Journal of Business Research 78 (2017): 101-110.
Li, Bo, et al. "Pricing strategy and coordination in a dual channel supply chain with a risk-averse
retailer." International Journal of Production Economics 178 (2016): 154-168.
Newberry, Susan. "Public sector reforms and sovereign debt management: Capital market
development as strategy?." Critical Perspectives on Accounting 27 (2015): 101-117.
Oestreicher-Singer, Gal, and Lior Zalmanson. "Content or community? A digital business
strategy for content providers in the social age." MIS quarterly (2013): 591-616.
Patel, Pankaj C., and James J. Chrisman. "Risk abatement as a strategy for R&D investments in
family firms." Strategic Management Journal 35.4 (2014): 617-627.
Patel, Pankaj C., and James J. Chrisman. "Risk abatement as a strategy for R&D investments in
family firms." Strategic Management Journal 35.4 (2014): 617-627.
Shi, Charles, Kuntara Pukthuanthong, and Thomas Walker. "Does disclosure regulation work?
Evidence from international IPO markets." Contemporary Accounting Research 30.1 (2013):
356-387.
Sibirskaya, Elena, et al. "Strategy of systemic development of entrepreneurial infrastructure of
regional economy." European Research Studies 18.3 (2015): 239.

16STRATEGIC MANAGEMENT
Wuyts, Stefan, and Shantanu Dutta. "Benefiting from alliance portfolio diversity: The role of
past internal knowledge creation strategy." Journal of Management 40.6 (2014): 1653-1674.